Where the Aussie ‘income squeeze’ stems from
Sean Langcake from Oxford Economics examines the current economic landscape, presenting his viewpoint on aspects including household spending, disposable income, and interest rates. Sean describes Australia’s economic growth as ‘soggy’, referring specifically to subdued household spending. While he acknowledges the relief brought about by government subsidies on utilities, he shares concerns about a ‘real squeeze’ affecting incomes with the savings rate remaining just slightly above zero.
Adding to these economic pressures, Sean comments on increasing interest rates and the rise in the share of income going to tax payments. He further delves into the worrying situation of disposable income reaching its lowest in eight years. Despite this, he notes that strong income growth is being driven by a tight labor market along with increases in minimum and award wages. He suggests this scenario can be a concern for the Reserve Bank of Australia (RBA) due to the increasing pace.
Sean Langcake
Head of Macroeconomic Forecasting, Oxford Economics
+61 (0) 2 8458 4236
Sean Langcake
Head of Macroeconomic Forecasting, Oxford Economics
Sydney, Australia