Australia’s economy is a relentless growth machine, notching up its 103 consecutive quarter without a technical recession in 2017’s first quarter.
But that record-breaking run masks just how volatile Australia’s growth drivers has been over the years and nothing demonstrates that better than the chart below from the National Australia Bank (NAB).
It reveals the contribution to annual GDP growth by various components over the past six years, and where the NAB sees that evolving in the three years ahead.
It’s an amazing chart, underlining the fact that Australia’s economy is just a series of moving parts.
The mining capital expenditure boom is in there, as its eventual unwind, now commonly referred to as the mining CAPEX cliff.
So too is the residential building boom, and its expected end.
And now, after the mining sector expanded operations, comes the fruits of that investment with export volumes likely to help bolster economic growth further in the years ahead.
Throughout it all, however, there has been one constant growth engine — households.
Shown in black, it’s constantly delivered growth despite all the movement in other parts of the economy, something that partially reflects increased population growth over that period.
Like ballast in a ship, it’s been a stabiliser, helping to keep the economy growing through a once-in-a-generation transition.
Given the importance of household consumption, the largest part of the Australian economy by some margin, it also helps to explain why concerns over the household sector have grown in recent years.
Weak household incomes growth, courtesy of soft inflationary pressures and record-low wage growth, has seen household spending decelerate, even with a noticeable reduction in the level that households are saving.
That trend has caught the eye of many commentators, raising concern that households many not be able to deliver as they have in the past to overall economic growth.
That will likely be determined by what happens in the labour market, meaning all data on that front will be scrutinised heavily in the coming months in relation to the outlook for growth, inflation and interest rates.