The four pictures that tell our (recent) economic story

As is often the case, I was halfway through writing about something else, when another inspiration hit, this time courtesy of some interactions I had on social media.

And it’s not directly investing-related, today, but it does go to our economic situation, and the subsequent potential political upheaval that seems to be building.

Don’t worry – I’m not going to delve into the politics.

But if you’re an investor, you probably have an interest in the broader economy and economic policy.

So I wanted to simply share four screenshots, with only a small amount of commentary, which I think demonstrate (at least in significant part, if not entirely), how people are thinking, based on what’s actually happening in the economy.

To set the scene, a chart from a KPMG report, taken from reporting in the Sydney Morning Herald, outlining how we’re feeling, overall, and by age cohort:

So, we know how people are feeling.

But why?

Lots of reasons, but I think the three screenshots that follow tell a pretty significant part of the story.

First, while we’ve only had two recessions over the past 36 years, the numbers on GDP per capita are starkly different (the summary was created by Google’s Gemini AI, using ABS data):

That tells the story at a national, aggregate level, but averaged to a per-person statistic, and shows that total GDP masks a less healthy recent past.

Then, there’s real wages, with a really significant fall since 2021, via the Australian Bureau of Statistics:

Thankfully, recent data has started to recover on this front… but we’re still a long, long way behind, overall.

And that’s wages compared to average consumer prices. But the housing affordability stats are even more stark, from the Australian Institute of Health and Welfare:

So, while each dataset isn’t directly comparable, and there are always going to be differences across different age groups, geographies, income levels and time-frames, I think it’s a pretty stark summary.

– People are feeling less satisfied, for lots of reasons, but many presumably economic.

– While the economy has been growing, a lot of that growth (sometimes even more than the total growth) has been offset by a larger population. The pie continues to grow, but the slices often get smaller.

– Not only have prices increased (and ‘sticker shock’ is real), but wages haven’t kept up, since COVID. People feel – and are – poorer.

– And housing, only partly captured in the CPI data, has consumed more and more of the household budget, leaving far less available to pay those higher prices, even allowing for wage rises.

Together, it’s a story of economic underperformance and, I think, justified unhappiness (even if I’d rather have our problems than almost anyone else’s!).

True, some of it is outside the realm of government influence – cycles have always happened – but some is absolutely the result of actions (including inaction).

And regardless, those impacts seem to have coalesced into social disruption and potentially political upheaval.

Whether that upheaval results in better or worse outcomes is up for debate, of course, but I don’t think we should be surprised that it’s happening.

Fool on!

The post The four pictures that tell our (recent) economic story appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.