The recession we're already in

Written on the 13 December 2016

Midway through last week many finance journos, including yours truly, started hyperventilating when the official September quarter gross domestic product (GDP) data came out.

That's because it was a shock. It was negative. In fact it was quite a bit negative, at minus 0.5 per cent.

Ok "hyperventilating" might be a bit too strong a word, but I for one found my heart rate creeping up quite a bit - for good reason too.

Australia has only produced a handful of negative GDP "reads" over the past quarter century. The economy literally contracted in the three months to September. It produced less. It was weird.

Most Australians economists, however, will tell you we are not in recession. They're quite right too. We're not.

To experience a technical recession, an economy needs to suffer at least two consecutive negative quarters of GDP (or total economic output).

What really struck me though, as I started talking to a seemingly endless line-up of Australia's top economists over the hours that followed the data release, was one comment in particular.

'It doesn't feel like a recession'.

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Source:  ABC News