The Australian Bureau of Statistics (ABS) releases the 2016 fourth quarter GDP (gross domestic product) data on 28 February.
The last release by the ABS showed the Aussie economy had contracted in the third quarter of 2016. That was when most economists had forecast a big increase in GDP.
Right now, most economists are predicting the same thing — a big rebound for the Aussie economy. In fact, most mainstream economists aren’t debating whether the economy will expand or contract…they’re just debating how big the expansion will be.
After all, this is the Aussie economy we’re talking about…the miracle Aussie economy where nothing goes wrong, and where it expands for 26 straight years.
Plus, think of it this way — most of the economists who take part in these surveys were probably still at school or university the last time Australia went into recession.
They have no idea what a recession looks like. They are clueless about what to look out for when a recession is imminent. They don’t know the clues. They just know that Australia doesn’t ‘do’ recessions.
Well, we’ll just say that no boom lasts forever. It’s shocking that we even have to say that. But we do. Because there are a significant number of people in Australia with no concept of what a recession looks like, let alone having experienced one.
That’s why, in our view, when the Aussie economy goes into recession, it won’t be a short-term blip. It will hit the economy, businesses and individuals hard.
Take the Netherlands as an example. It currently holds the record for the longest stretch of economic growth without a recession. It lasted from the fourth quarter of 1982 to the third quarter of 2008.
It was a whopping 103 quarters of economic growth — one quarter shy of 26 years.
That’s impressive. But Australia is closing in on that number. At the latest count, the Aussie economy has experienced 100 quarters without a recession.
But our bet is that streak will fall on 28 February, when the ABS announces a second consecutive quarter of contraction. That’s when it will get interesting for the Aussie economy.
Kris’ background includes 20 years of experience stock analysis, financial brokering, and wealth management. He has worked for Port Phillip Publishing for over ten years and currently pens Money Morning Australia and the Port Phillip Insider.
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