Households are now spending more than they are earning — and that’s not sustainable – Analysis & Opinion – ABC News (Australian Broadcasting Corporation)

Household debt and why we should budget

It may not have garnered the same attention as the surprisingly strong second-quarter GDP growth, but an equally striking fact in last week’s national accounts was household savings had just hit a post-GFC low.

The ability of the Australian economy to keep growing in the face of a number of challenges in recent years owes a fair bit to the savings so prudently built up after the sobering experience of the GFC.

As JP Morgan’s Tom Kennedy points out, the persistent decline in savings since 2014 has been an important part of Australia’s real GDP growth performance, helping offset some of the spending drag associated with record low wages growth and an unemployment rate that has yet to fire up wages.

 

via Households are now spending more than they are earning — and that’s not sustainable – Analysis & Opinion – ABC News (Australian Broadcasting Corporation)