Eating in and staying home: Australian economic growth slows to pandemic levels as consumers cut back
Household consumption has slowed as energy, food, rent and health costs increased
Household consumption has slowed as energy, food, rent and health costs increased
Australian gross domestic product (GDP) grew by 0.2 percent in the December quarter and by 1.5 percent over 2023, according to figures from the Australia Bureau of Statistics (ABS). This is the slowest annual growth rate since the pandemic, driven largely by a fall in household consumption and consumer spending. In per capita terms, GDP actually fell by 1 percent over the year while the population grew by approximately 2.5 percent.
CBA Head of Australian Economics Gareth Aird said “momentum in the economy has ground to a halt”, with consumer spending weakening beyond the Reserve Bank’s (RBA) expectations. “On a per capita basis real consumer spending is down by a very large 2.4% over the year,” Mr Aird said. “Such an outcome would normally be associated with a large negative shock or recession. The weakness in the consumer lies at the heart of the soft GDP outcomes.”
Mr Aird said household consumption declined significantly on a per capita basis in 2023, and the RBA would be surprised by the level of weakness. He noted that in November, the RBA was forecasting annual household consumption to come in at 1.1 percent for 2023. The RBA lowered its forecast to 0.4 percent last month. The actual figure reported by the ABS yesterday is 0.1 percent.
“The RBA’s highly aggressive rate hiking cycle has clearly worked to slow demand growth in the economy,” he said. “Rising mortgage payments along with a lift in tax payable and the effects of elevated inflation have weighed on household purchasing power.”
Mr Aird said the interest paid on housing debt had increased by almost 40% over the past year.
“The ongoing expiry of ultra-low fixed rates will see interest paid continue to grow at a decent clip until the RBA cuts the cash rate. For context, interest paid on housing debt is up by a massive 162% from pandemic lows.”
Lower household consumption is being driven by cuts in discretionary spending because electricity, rent, food and health are costing more. Australians are eating at home more often and spending less on recreation, and fewer people are buying new cars, clothes or footwear.
The December quarter captures the Australian summer holiday period. During the quarter, there was a 9% fall in overseas travel spending as Aussies chose cheaper holidays, preferring destinations closer to home with New Zealand and Indonesia the most popular destinations.
Mr Aird notes the level of new home building in Australia has dropped well below where it was pre-pandemic. There was a 3.8 percent fall in residential property investment during the December quarter due to a major decline in new construction and renovations. “Against a big lift in population growth, the supply and demand mismatch in the housing market has put significant upward pressure on rents,” Mr Aird said. “It has also fed into the increase in home prices over the past year despite the big reduction in borrower capacity due to significantly higher mortgage rates.”
Mr Aird said business investment was “a bright spot” in the economy, up 8.2% over the year. This was largely due to an increase in non-residential and engineering construction over 2023. Katherine Keenan, ABS head of national accounts, said the key drivers of non-dwelling building construction in the December quarter were data centres and warehouses.
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At least for people who carry the APOE4 genetic variant, a juicy steak could keep the brain healthy.
Must even steak be politicised? The American Heart Association recently recommended eating more “plant-based” protein in a move to counter the Health and Human Services Department’s new guidelines calling for more red meat.
Few would argue that eating a Big Mac a day is good for you.
On the other hand, growing evidence, including a study last month in the Journal of the American Medical Association, suggests that eating more meat—particularly unprocessed red meat—can reduce the risk of Alzheimer’s in the quarter or so of people with a particular genetic predisposition.
The APOE4 gene variant is one of the biggest risk factors for Alzheimer’s.
You inherit one copy of the APOE gene from each parent. The most common variant is APOE3; the least is APOE2.
The latter carries a lower risk of Alzheimer’s, while the former is neutral. A quarter of people carry one copy of the APOE4 variant, and about 2% carry two.
APOE4 is more common among people with Northern European and African ancestry. In Europe the variant increases with latitude, and is present in as many as 27% of people in northern countries versus 4% in southern ones. God smiled on the Italians and Greeks.
For unknown reasons, the APOE4 variant increases the risk of Alzheimer’s far more for women than men.
Women’s risk multiplies roughly fourfold if they have one copy and tenfold if they have two. Men with a single copy show little if any higher risk, while those with two face four times the risk.
What makes APOE4 so pernicious? Scientists don’t know exactly, but the variant is also associated with higher cholesterol levels—even among thin people who eat healthily.
Scientists have found that cholesterol builds up in brain cells of APOE4 carriers, which can disrupt communications between neurons and generate amyloid plaque, an Alzheimer’s hallmark.
The Heart Association’s recommendation to eat less red meat may be sound advice for people with high cholesterol caused by indulgent diets.
But a diet high in red meat may be better for the brains of APOE4 carriers.
In the JAMA study, researchers at Sweden’s Karolinska Institute examined how diet, particularly meat consumption, affects dementia risk among seniors with the different APOE variants.
Higher consumption of meat, especially unprocessed red meat, was associated with significantly lower dementia risk for APOE4 carriers.
APOE4 carriers who consumed the most meat—the equivalent of 4.5 ounces a day—were no more likely to develop dementia than noncarriers. (
The study controlled for other variables that are known to affect Alzheimer’s risk including sex, age, physical activity, smoking, alcohol consumption and education.)
APOE4 carriers who ate the most unprocessed meat were at significantly lower risk of dying over the study’s 15-year period and had lower cholesterol than carriers who ate less. Go figure. Noncarriers, however, didn’tenjoy similar benefits from eating more red meat.
The study’s findings are consistent with two large U.K. studies.
One found that each additional 50 grams of red meat (equivalent to half a hamburger patty) that an APOE4 carrier consumed each day was associated with a 36% reduced risk of dementia.
The other found that older women who carried the APOE4 variant and consumed at least one serving a day of unprocessed red meat had a cognitive advantage over carriers who ate less than half a serving, and that this advantage was of roughly equal magnitude to the cognitive disadvantage observed among APOE4 carriers in general.
In all three studies, eating more red meat appeared to negate the increased genetic risk of APOE4.
Perhaps one reason men with the variant are at lower Alzheimer’s risk than women is that men eat more red meat.
These findings might cause chagrin to women who rag their husbands about ordering the rib-eye instead of the heart-healthy salmon.
But remember, the cognitive benefits of eating more red meat appear isolated to APOE4 carriers.
Nutrition is complicated, and categorical recommendations—other than perhaps to avoid nutritionally devoid foods—would best be avoided by governments and health bodies.
Readers can order an at-home test from any number of companies to screen for the APOE4 variant.
The Swedish researchers hypothesize that APOE4 carriers may be evolutionarily adapted to carnivorous diets, since the variant is believed to have emerged between one million and six million years ago during a “hypercarnivorous” period in human history.
The other two APOE variants originated more recently, during eras when humans ate more plants.
APOE4 carriers may absorb more nutrients from meat than plants, the researchers surmise. Vitamin B12—low levels have been associated with cognitive decline—isn’t naturally present in plant-based foods but is abundant in red meat.
Foods high in phytates (such as grains and beans) can interfere with absorption of zinc and iron (also high in red meat), which naturally declines with age. So maybe don’t chuck your steak yet.
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