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Are savers hurting the Australian economy?
High levels of debt and fears of a recession are causing Aussies to squirrel away their savings instead of spending on discretionary items – hurting the economy at large as a result.
Are savers hurting the Australian economy?
High levels of debt and fears of a recession are causing Aussies to squirrel away their savings instead of spending on discretionary items – hurting the economy at large as a result.
The Australian economy grew 0.4 per cent in seasonally adjusted chain volume terms for the September quarter and 1.7 per cent through the year, new figures from the Australian Bureau of Statistics have shown.
However, the housing sector is not holding up its weight, with subdued figures coming from consumers.
The figures showed that dwelling investment recorded its fourth consecutive decline with a fall of 1.7 per cent during the quarter.
Household expenditure increased 0.1 per cent, with weakness in spending on discretionary goods and services. Furthermore, the household saving ratio rose to 4.8.
“The reduction to tax payable did not translate to a rise in discretionary spending, which led to a visible impact to household saving,” ABS chief economist Bruce Hockman said.
Even though the tax cuts were generally saved by consumers instead of spent in the economy, federal Treasurer Josh Frydenberg noted that the economy is benefiting from the cuts.
“Whether spent or save, the tax cuts have helped put household in a stronger economic position, making them more financially secure with more money in their pocket, and this will support the economy,” the Treasurer said.
“Household disposable income grew by 2.5 per cent, the fastest quarterly rise in a decade, with the ABS saying it was driven by a decline in income tax payable and interest paid on dwellings as well as continued rises in the compensation of employees.”
The rise in household gross disposable income was driven by a decline in income tax payable and interest paid on dwellings, as well as continued rises in compensation of employees.
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