All the government spin in the world doesn't put more money in people's bank accounts

Extract from The Guardian

Grogonomics

Australian economy

Greg Jericho

The past year has been the worst in Australian retail since the 1990 recession. Good luck spinning that

 @GrogsGamut

Tue 5 Nov 2019 04.00 AEDT Last modified on Tue 5 Nov 2019 04.03 AEDT

‘So far this year, households have not increased their volume of retail purchases at all. Since September last year, the volume of retail sales has actually fallen in both trend and seasonally adjusted terms.’ Photograph: Mick Tsikas/AAP

The latest retail trade figures show that despite protestations from the government that the fundamentals of the economy are strong, the economy is in a deep funk and the tax cuts so far have yet to spur any household spending at all.
One of the problems for governments when it comes to the economy is that while you might be able to spin a line that gets a good soundbite on the 6pm news, you can’t actually fool households. Households know how much money they have to spend.
All the spin in the world doesn’t put more money in people’s bank accounts.

Spin doesn’t raise wages.
When the June GDP figures came out the treasurer was at pains to let journalists know that we shouldn’t jump to conclusions because those figures did not “have the benefits of the tax cuts or the full flow through from the interest rate cuts”.
We now have three months of retail trade figures that do include those factors, and the news is grim.
In September, retail trade grew by just 0.2% in both trend and seasonally adjusted terms, and the annual growth of 2.4% in trend terms was the worst since December 2017:

The annual growth of retail trade has now fallen for 12 consecutive months – the worst run since the global financial crisis.

But while these figures are bad, where the truly awful news comes through is in the quarterly volume figures.
In the September quarter the volume of retail trade fell, and it marked the worst first nine months of a year since 2008.
So far this year, households have not increased their volume of retail purchases at all. Since September last year, the volume of retail sales has actually fallen in both trend and seasonally adjusted terms:

While the seasonally adjusted measures is a bit more erratic, it is worth noting that according to this measure the past 12 months has been the worst in Australian retail since the 1990 recession:

Good luck spinning that.

The pathetic growth in the volume of retail trade is important because it gives us a solid insight into what is likely to occur in the September GDP figures.
Household consumption, which makes up over half of total GDP, includes more than retail spending (such as housing, health and insurance bills) but the two are closely associated:

In July, Josh Frydenberg suggested of household consumption that “yes, it’s a bit weaker than we would like but it is starting, it is still growing at 0.4 and we’ve yet to see the flow through from the tax cuts”.
But in the June quarter, retail trade grew by 0.06%; whereas in this quarter it fell by 0.07%. So if household consumption is going to improve in the September quarter, it is mostly going to come off the back of households paying bills.
It is now beyond clear that the economy is utterly stagnant.
This was clear in the latest inflation figures, and has been supported by these retail trade figures as well as other data out in the past week.
While there was some improvement in building approvals in August, it was only evident in the very erratic seasonally adjusted measure, and came via big jumps in approvals for apartment buildings in Brisbane and Adelaide. The trend measure saw yet another fall:

And the number of private sector building approvals remains well below what it was a year ago:

This is not a shock given the latest RBA figures for credit growth show the worst annual growth of housing credit ever recorded, with the annual growth of investor housing credit falling for the first time ever:

And the latest producer price index figures released last Friday show the growth of demand in the economy also fell in the September quarter – down to 1.5% from 1.7% – the worst result for nearly three years:

It is clear the tax cuts and interest rate cuts alone are not enough.
There is little sense that the RBA will cut rates again today but neither is there any sense that the two recent cuts have been enough to do anything other than stem the bleeding.
These latest retail figures are yet more evidence that if the Morrison government wants to have any economic credibility, the mid-year economic and fiscal outlook to be released next month must contain some fiscal stimulus measures.
And really given the state of the economy, the government shouldn’t even wait that long.
• Greg Jericho writes on economics for Guardian Australia