Disaster averted

The Australian Bureau of Statistics released its GDP figures for the December quarter today. The headline news is that the economy has avoided recession, defined as two consecutive quarters of contraction. Having recorded a 0.5% decline in the September quarter, the economy rebounded with growth of 1.1%, thanks largely to increased household consumption and strong price rises in commodities such as coal and iron ore.

Appearing before a Senate Estimates committee this morning, Treasury secretary John Fraser warned the government against repeating the mistakes of the Howard government in spending rather than saving the commodities windfall. “We need to take great care not to fall into the trap of spending unexpectedly higher revenue, should it arise, in a way that would structurally weaken the budget as may have occurred through the early 2000s,” he said.

As expected, Treasurer Scott Morrison welcomed the improved GDP figures, stating that the result “confirms the successful change that is taking place in our economy as we move from the largest resources investment boom in our history to broader based growth”. As to Fraser’s warning about spending, the treasurer would not be drawn.

Most economic commentators shared Morrison’s enthusiasm, with Business Insider especially ebullient. The Guardian’s Greg Jericho was more cautious, noting the unique circumstances that produced the result:

One reason the figure is so strong is because the September quarter figures were so bad – and they were bad for a number of one-off reasons, including bad weather which reduced housing construction. So it’s not like the economy has suddenly got a lot better, more we just didn’t suffer the same bad events in December that occurred in September.

In the Huffington Post, economist Jim Stanford pointed out that there was also “growing evidence of a startling reallocation of total income – away from workers, in favour of businesses”, and that “total wages and salaries paid out to Australian workers actually fell 0.5 percent”, which may not bode well for future growth.

Meanwhile, in the United States, President Donald Trump addressed a joint sitting of Congress for the first time. Sounding a more positive tone than his inaugural address in January, Trump told Americans that “a new surge of optimism is placing impossible dreams firmly within our grasp. What we are witnessing today is the renewal of the American spirit.”

Nevertheless, Trump was unable to resist the urge to remind his audience about the economic and social disaster he believes he inherited:

Ninety-four million Americans are out of the labour force. Over 43 million people are now living in poverty. And over 43 million Americans are on food stamps. More than one in five people in their prime working years are not working. We have the worst financial recovery in 65 years. In the last eight years, the past administration has put on more new debt than nearly all of the other presidents combined.

Naturally, Trump believes that he alone is capable of turning the American empire around. But as Abigail Tracy writes in Vanity Fair, Trump remains strong on platitudes but weak on policy detail.

Today’s links

• Russia and China have vetoed a UN resolution that would have imposed sanctions on Syria over its alleged chemical weapons attacks in 2014 and 2015.
• Today’s Australian included 4600 words on section 18C. As this farcical debate ploughs on, they are again on the warpath [possible paywall] against the Australian Human Rights Commission’s Gillian Triggs.
• Labor Party divisions on a “Buffett rule” aren’t going away. Former treasurer Wayne Swan has declared his support, putting him at odds with Bill Shorten and Chris Bowen.
• Monash University’s James Walter contemplates the possible demise of the Liberal Party. And following George Christensen’s resignation as National Party whip, the wisdom of the Queensland Liberal National Party amalgamation is being questioned [possible paywall].
• James Ashby is in the news again, after threatening to release recordings of his phone calls with dumped WA One Nation candidate Dane Sorensen. And is One Nation becoming a party of free marketeers?
• Paul Kelly has dutifully spouted neoliberal conventional wisdom for more than three decades, and is struggling to adapt to its unravelling. Having made peace with the populist right two weeks ago, he now turns his alarm towards the populist left.
• Janet Albrechtsen thinks she’s discovered a potential conservative dream team [possible paywall]: Peter Dutton as leader of the Liberals with Michaelia Cash as his deputy. The main advantage being that “they will drive the Left nuts”.