Everyone is having their say on where the Australian economy, with one CEO saying that Australia's economy is a "house of cards".
Many believe Australia is already in a recession on a per-person basis. Total GDP is influenced by Australia's rising population, which has risen quite fast compared to most western countries due to the higher level of immigration.
However, on a per capita/per person basis the GDP figures released today may show that Australian households are in a recession due to two consecutive quarters of GDP per capita declines.
Many of Australia's biggest blue chips benefit from total GDP growth like Wesfarmers Ltd (ASX: WES) and Commonwealth Bank of Australia (ASX: CBA), but the average Australian is seeing very limited wage growth.
Freelancer Ltd (ASX: FLN) CEO Matt Barrie recently said to the AFR that "In Australia every indicator is blinking red. It's a house of cards. We're highly dependent on China (we're on par with the Congo for how reliant we are) and they are in a trade war. We have the housing market falling off a cliff, and this is happening from Vancouver to Auckland too."
Australia's dependence on China is not new. During the GFC it was Australia's link with China that kept us going where other regions like North America and Europe particularly struggled. But this time, a Chinese slowdown could be a factor in an Australian recession.
Mr Barrie wasn't finished, he said "The royal commission will be a catalyst for the collapse of the Australian housing market, with the other catalyst being China coming off the boil and regulations to stop the flow of capital out of China. We should never have let the property bubble get this big. People can't afford the homes and wages haven't kept up. I worry the next government will launch populist policies and we'll be on the way to being the next Argentina."
Clearly not a fan of Labor's election pledges, it seems. Did he see any silver lining? "The bright spark is iron ore … but if that comes off the boil we're in a world of hurt."
Foolish takeaway
As Motley Fool Chief Investment Officer Scott Phillips likes to regularly point out, the worst case scenario seldom eventuates. So perhaps Mr Barrie is feeling a bit too pessimistic about the situation.
