I lastly arrived again residence late final night time, so I’m catching up at this time. Half 2 of the collection I began on Monday will seem subsequent Monday. Yesterday (March 4, 2026), the Australian Bureau of Statistics (ABS) launched the most recent – Australian Nationwide Accounts: Nationwide Earnings, Expenditure and Product, December 2025. The information exhibits that the Australian economic system grew by 0.8 per cent within the December-quarter 2025 (up from 0.5 per cent) and by 2.6 per cent (up from 2.1) over the 12 months. However as you will note, it was the stock cycle that was the distinction and we will count on that to reverse within the March-quarter 2026 given that companies could have replenished their shares or not offered shares within the final quarter of 2025. So let’s not assume this moderately robust progress outcome will persist into 2026.
The primary options of the Nationwide Accounts launch for the September-quarter 2025 had been (seasonally adjusted):
- Actual GDP elevated by 0.8 per cent for the quarter (0.5 per cent final quarter). The annual progress charge was 2.6 per cent (2.1 final quarter).
- GDP per capita grew 0.4 per cent (0.1 per cent final quarter) and 0.9 per cent for the yr.
- Australia’s Phrases of Commerce rose 0.4 per cent for the quarter and -1.2 per cent over the 12 month interval.
- Actual web nationwide disposable earnings, which is a broader measure of change in nationwide financial well-being, rose by 0.5 per cent for the quarter (0.4 final quarter) and a pair of.5 per cent over the 12 months (up from 2.1.
- The Family saving ratio (from disposable earnings) rose to six.9 per cent from 6.1 per cent.
- GDP per hour labored was flat for the quarter (0.2 final quarter) and 1.0 per cent for the yr.
General progress image – stronger progress continues
The ABS media launch – Australian economic system grew 0.8% within the December quarter – stated that:
Australian gross home product (GDP) rose 0.8 per cent within the December quarter 2025 and a pair of.6 per cent in comparison with a yr in the past (seasonally adjusted, chain quantity measure) …
There was broad based mostly financial progress within the quarter, with rises noticed in a big majority of industries. Private and non-private demand every contributed 0.3 share factors to GDP progress …
GDP per capita elevated for the fourth consecutive quarter and is now 0.9 per cent greater than a yr in the past, the best by the yr progress since December quarter 2022 …
Discretionary spending rose 0.4 per cent reflecting the growth of Black Friday gross sales and powerful attendance at sporting and live performance occasions …
Non-public funding elevated for the fifth consecutive quarter, rising by 0.7 per cent and contributing 0.1 share factors to GDP progress. This rise follows a 3.2 per cent enhance within the earlier quarter …
Public funding grew by 0.9 per cent, sustaining its power following a 3.0 per cent rise within the September quarter …
The family saving to earnings ratio elevated to six.9 per cent, up from 6.1 per cent within the September quarter. The ratio is now at its highest stage for the reason that September quarter 2022. Family disposable earnings rose 1.8 per cent, considerably greater than the nominal enhance in family spending of 1.1 per cent.
The quick story:
1. Home demand was robust.
2. Sturdy help from all ranges of presidency.
3. Funding (non-public and public) constructing new capability.
The following graph exhibits the quarterly progress during the last 5 years with the acute observations through the worst a part of the COVID restrictions and authorities earnings help taken out.
To place this into historic context, the subsequent graph exhibits the last decade common annual actual GDP progress charge for the reason that Nineteen Sixties (the horizontal purple line is the typical for the whole interval (3.27 per cent) from the September-quarter 1960 to the September-quarter 2025.
Though COVID severely interrupted the economic system, as soon as we take out the quarters between March 2020 and March 2022 (inclusive), then the typical since 2020 has been 1.9 per cent each year – very mediocre.
It’s also apparent how far under historic tendencies the expansion efficiency of the final 2 a long time have been because the fiscal surplus obsession has intensified on either side of politics.
Even with an enormous family credit score binge and a once-in-a-hundred-years mining growth that was pushed by stratospheric actions in our phrases of commerce, our actual GDP progress has declined considerably under the long-term efficiency.
The Nineteen Sixties was the final decade the place authorities maintained true full employment.
GDP per capita rising
Within the December-quarter 2025, GDP per capita grew by 0.4 per cent.
Whereas commentators give attention to this statistics, the which means of the typical is questionable, given the extremely skewed earnings distribution in the direction of the highest finish.
What we will say is that if the typical is declining, then these on the backside are doing it very powerful certainly.
The next graph of actual GDP per capita (which omits the pandemic restriction quarters between December-quarter 2020 and December-quarter 2021) tells the story.
Evaluation of Expenditure Elements
The next graph exhibits the quarterly share progress for the foremost expenditure parts in actual phrases for the September-quarter 2025 (gray bars) and the December-quarter 2025 (blue bars).
It would shock you that a lot of the parts had been weaker than final quarter, but total actual GDP progress was stronger.
The reply lies within the (not proven) shift in inventories to $657 million within the present quarter after falling $1,801 million within the September-quarter 2025.
Inventories are thought of to be ‘funding’ expenditure and there was an enormous rise in inventory constructing by public authorities, mining and to a lesser extent the farm sector.
This kind of expenditure is very cyclical.
Contributions to progress
The next bar graph exhibits the contributions to actual GDP progress (in share factors) for the primary expenditure classes. It compares the December-quarter 2025 contributions (blue bars) with the earlier quarter (grey bars).
You possibly can see the large shift in stock contribution, which accounted for 50 per cent of the general December-quarter progress charge.
- Family consumption expenditure added 0.1 factors (down from 0.3).
- Non-public funding expenditure added 0.1 factors (down from 0.6).
- Web exports undermined progress by 0.1 level (final quarter -0.2) – the 0.3 level export contribution outweighed the -0.4 factors import subtraction (bear in mind optimistic import expenditure progress constitutes a lack of progress).
- General authorities contribution was 0.3 factors – the recurrent contribution (0.2 factors) including to the capital contribution (0.1 level).
Materials residing requirements rose 0.5 factors within the December-quarter
The ABS inform us that:
A broader measure of change in nationwide financial well-being is Actual web nationwide disposable earnings. This measure adjusts the quantity measure of GDP for the Phrases of commerce impact, Actual web incomes from abroad and Consumption of mounted capital.
Whereas actual GDP progress (that’s, complete output produced in quantity phrases) rose by 0.8 per cent within the December-quarter, actual web nationwide disposable earnings progress rose by 0.5 per cent.
How can we clarify that?
Reply: The phrases of commerce grew by 0.4 per cent within the September-quarter which complemented the rise in compensation of workers (COE) of 6.4 per cent.
The rise in COE was even throughout the non-public and public sectors and was not solely a mirrored image of the stronger exercise but additionally the timing of a variety of scheduled wage rises in addition to a bevy of recent enterprise agreements being finalised.
Slight acquire in productiveness progress in Market-sector
Actual GDP rose 0.8 per cent for the quarter, whereas the expansion in working hours was 0.8 per cent.
Which signifies that GDP per hour was static for the yr.
The sectoral productiveness progress was:
- Market sector – 1.51 per cent (annual), 0.3 per cent (quarter).
- Non-market sector – -0.71 per cent (annual), -0.71 per cent (quarter).
- General – 1.01 per cent (annual), 0.0 per cent (quarter).
The next graph presents quarterly progress charges in actual GDP and hours labored utilizing the Nationwide Accounts information for the final 5 years to the December-quarter 2025.
To see the above graph from a distinct perspective, the subsequent graph exhibits the annual progress in GDP per hour labored (labour productiveness) from the start of 2008 to the December-quarter 2025.
The horizontal purple line is the typical annual progress for the reason that September-quarter 2008 (0.77 per cent), which itself is an understated measure of the long-term development progress of round 1.5 per cent each year.
Family saving ratio improves by 0.8 factors
The next graph exhibits the family saving ratio (% of disposable earnings) from the December-quarter 2000 to the present interval.
It exhibits the interval main as much as the GFC, the place the credit score binge was in full swing and the saving ratio was adverse to the rise through the GFC after which the newest rise.
An rising saving ratio offers the family sector total with an elevated capability to threat handle within the face of uncertainty.
The following graph exhibits the saving ratio since 1960, which illustrates the best way during which the neoliberal interval has squeezed family saving.
Going again to the pre-GFC interval, the family saving ratio was adverse and consumption progress was maintained by rising debt – which is an unsustainable technique provided that family debt is so excessive.
Regardless that the ratio has been rising barely in latest quarters, it’s nonetheless nicely under previous ranges.
The next desk exhibits the impression of the neoliberal period on family saving. These patterns are replicated world wide and expose our economies to the specter of monetary crises way more than in pre-neoliberal a long time.
| Decade | Common Family Saving Ratio (% of disposable earnings) |
| Nineteen Sixties | 13.9 |
| Nineteen Seventies | 16.0 |
| Eighties | 11.8 |
| Nineties | 4.8 |
| 2000s | 1.2 |
| 2010s | 6.2 |
| 2020s on | 8.6 |
| Since RBA hikes | 4.5 |
The distribution of nationwide earnings – wage share falls 0.2 factors
The wage share in nationwide earnings fell from 54.1 per cent to 53.9 per cent within the December-quarter 2025.
The revenue share rose 0.1 level to 27.1 per cent.
The residual is basically the federal government share.
The primary graph exhibits the wage share in nationwide earnings whereas the second exhibits the revenue share.
The declining share of wages traditionally is a product of neoliberalism and can finally must be reversed if Australia is to take pleasure in sustainable rises in requirements of residing with out file ranges of family debt being relied on for consumption progress.
Conclusion
Keep in mind that the Nationwide Accounts information is three months outdated – a rear-vision view – of what has handed and to make use of it to foretell future tendencies will not be easy.
The Australian economic system grew by 0.8 per cent within the December-quarter 2025 (up from 0.5 per cent) and by 2.6 per cent (up from 2.1) over the 12 months.
The stock cycle was the distinction and we will count on that to reverse within the March-quarter 2026 given that companies could have replenished their shares or not offered shares within the final quarter of 2025.
So let’s not assume this moderately robust progress outcome will persist into 2026.
Clarification on terminology
I advocate a degrowth technique for the worldwide economic system total provided that our footprint is 1.7 instances the capability of the biosphere to regenerate.
To attain that technique, provided that many poorer nations should proceed to develop, would require moderately substantial lower backs in spending and consumption within the richer nations.
After I analyse the Nationwide Accounts information or any expenditure/output information, I write as if progress is ‘good’.
However that terminology is used within the context that with out financial progress and with none substantial shifts in earnings distribution and authorities transition insurance policies, making an attempt to pursue a recessionary technique would harm the weakest members of our society disproportionately.
In some respects, I’m abstracting from the damaging actuality of our ecological footprint.
That’s sufficient for at this time!
(c) Copyright 2026 William Mitchell. All Rights Reserved.
