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Australia’s Economic Growth Index hits a record low

Amidst the noise of politicians talking about their plans for economic growth this week, the announcement that Australia’s Leading Economic Index has hit an all time low has gone largely unreported.

The Westpac Leading Economic Index – which has been running since 1985 – is widely considered to be one of the best predictors of Australia’s economic growth. It is released monthly, and put simply, combines nine different economic measures which are often used to judge growth (such as stock market performance and the number of dwelling approvals) into a single number. According to Westpac, the Index provides a broad indicator of how Australia’s “growth in general is tracking relative to trend and likely turning points in the economic cycle.”

As the graph below shows, the Index last took a dip during the Global Financial Crisis in 2008, but then recovered shortly thereafter. However, despite the LNP’s claims to be economic masters, since they took office in September 2013, the Index has been steadily trending downwards to its current record low. australia-leading-economic-index

Which is more important – fact or fiction?

Westpac’s press release announcing this month’s Index focused primarily on the relative change in the Index value from last month – a drop of 1.53% – and didn’t mention the absolute Index number until the second last paragraph. Further, it was quick to state that the main drivers behind the recent downward trend in the Index were ‘external factors’ like commodity prices.

The few media outlets who have reported on this Index seem to have taken their lead from Westpac and talked primarily about relative changes to the overall number rather than commenting on the fact that the absolute number is heading south quicker than a polar bear fleeing the melting polar icecaps.

Meanwhile, Prime Minister Malcolm Turnbull and Treasurer Scott Morrison’s promotion of the Liberal National Party as the party best placed to deliver growth to the Australian economy continues to get significant airplay, despite little evidence to back up their claim.

This prioritisation of political noise over real information by much of the mainstream media is almost as troubling as Australia’s economic growth. The fact that we have heard almost nothing in the main news cycle about this disturbing trend is more than a little concerning. Even if the downward slide in our growth does turn out to be transitory, Australians deserve to hear facts about what’s going on rather than just political spin.

This article was first published on ProgressiveConversation.

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  1. mark delmege

    they wont want to announce a negative before elections

  2. Möbius Ecko

    Again you see the dissembling at play. During the height of the GFC Abbott, Hockey and much of the MSM blamed everything onto the Labor government, with Abbott saying external factors and the GFC were not an excuse, it was all Labor’s fault.

    Since being in government it has been the fault of everything and everyone else other than the Liberals, even Labor’s fault still. This is also diametrically opposed to something Abbott stated about taking responsibility and not making excuses.

    Yet the MSM is mum, which is the reason the woeful Liberals do as well as they do in the standings.

  3. townsvilleblog

    Responding to all those LNP wise economic manager policies, don’t tell me about economics we know about boats!

  4. paul walter

    The place is being ransacked and of course the future starts to look opaque.

  5. totaram

    Cutting govt. spending when the economy is weak and unemployment is high is reason for weak growth, but the neo-liberal macro-economic orthodoxy wants to “balance the budget” or some such nonsense. Wayne Swan undid his earlier good work by trying to “deliver a surplus” because being declared “best treasurer” probably went to his head. Then, Joe Hockey tried his best to outdo him but his worst excesses were blocked, or we would have surely had a recession. Unfortunately, all political parties in Australia have been “wedged” into playing by these highly damaging neo-liberal memes about “balanced budgets”, which even the IMF is beginning to have some doubts about.
    Until we get rid of this false doctrine, that budget deficits are “bad” and have to be repaid by future generations, we will not be able to be the kind of nation we want to be. This is based on old-fashioned “gold-standard currency” thinking and does not apply to modern-day fiat-currency nations and their economies. It’s a bit like trying to convince “flat earthers” that the earth is actually spheroidal, so it’s going to be very hard, especially when these old ideas suit certain vested interests who profit from them enormously. Guess why wealth inequality is rising rapidly.

  6. mark delmege

    Möbius Ecko…. The ruling ideas of each age have ever been the ideas of its ruling class… wise old man once said

  7. Mark

    The liberal party is a greater terrorist threat than ISIS …

  8. mark delmege

    No Mark, One is a terrorist outfit serving the interests of the other using a 14thC ideology, and the other is an organised gang serving the interests of global capital using a flat earth ideology.

  9. jim

    From IA 2013 ;…ACCORDING TO THE LINE flogged relentlessly for the last six years by the federal Coalition and the mainstream media, the Howard-Costello years – 1996 to 2007 – were a period of wonderful money management.

    “The Government of John Howard now looks like a lost golden age of reform and prosperity” is a favourite Tony Abbott mantra.

    Like countless propositions repeated ad nauseum by Australia’s media, the opposite is the truth. In fact, the Howard years are widely regarded outside Australia as dismally disappointing.

    Or, according to some, like veteran economics writer Kenneth Davidson: …………link;,5686 Since coming to office, Costello has presided over realised losses of $1.9 billion between July 1996 and July 2003 on currency swaps.

    What has happened under Costello’s watch is a major financial disaster. Even so, the Government has failed to provide a proper account to Parliament explaining how the losses occurred..What has happened under this LNP government is EVEN WORSE !.

  10. Stephen

    Now as has always been the case every thinking person should be actively campaigning to brake up the monopolies and duopolies that are choking our democracy; starting with media!

  11. totaram

    Jim: “Since coming to office, Costello has presided over realised losses of $1.9 billion between July 1996 and July 2003 on currency swaps.”

    That is nothing compared to everything else he did. The “surpluses” and the “future fund” (where he continues to enjoy a sinecure).
    Read about that scandal here:

    The Future Fund scandal

    And here’s more analysis about his reign as treasurer

    Listening to past Treasurers is a dangerous past-time

  12. Clean livin

    Gave up MSM quite a few years back. I quickly realised you need to be a dumb wit to believe the bull shit they print. Fortunately, it seems many others are doing the same thing, especially the under 30’s.

    And now the trend on FTA TV is following suit. Both forms will be out of business if they don’t catch up with what their remaining clients want.

    Hopefully the elections will send a strong message to the MSM that their time is up!

  13. thebustopher

    All you have to do is look at the last three years. It’s damningly stark

  14. Stephen Tardrew

    If you have been following the tends this is obvious however the complicity of the media in covering up L-NP incompetence cannot be overstated. This is one of the worst government economic managers of all time. Compared to Swan both Hockey and Morrison have driven the country into another recession thanks to ridiculous austerity and the effort to further entrench inequality through unfair taxation, and worse still, deflection for their responsibility as poor economic managers onto the low income, pensioners, disabled unemployed etc. They are actually destroying the lives of the victims of the GFC while blaming them for their the banksters and financial sectors incompetence. Half of the voters in this country are illogical conformist who are fearful of change even if the status quo is destroying their standard of living and employment opportunities. Talk about a nation of masochists.

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