The state of the economy at the street level

[Smurf1976]

Do you think Australia is actually cooked at this point

It's starting to feel very much like ~1990 to me and some very similar things happening.

At a state government level Victoria lead the rush into the abyss back then with Tasmania following. Same's happening now in the same order.

SA doesn't have a bank to go bust this time, but it does have an economically important steelworks in a very precarious position. Not the same scenario but it sure does rhyme.

A string of well known businesses (shops etc) went under back then and same happening now.

I'm paying more attention now than I was back then but it does have a similar overall feel to it. All that's missing is someone big to go bust - thus far we haven't got a Bond or Skase equivalent although I do have suspicions about one particular businessperson (I'll avoid names for legal reasons etc).

For those unfamiliar, it's a bit hard to comprehend just how well known Skase in particular became after the event. Even children were aware of him, it entered popular culture in a way that's hard to fully appreciate if you weren't there at the time.

That plus we haven't had any politicians singing or deadly consumer product scandals come to light yet, at least not to my knowledge.

 

[Smurf1976]

I'm seeing huge failings out there at the moment.

Business failings?

 

[moXJO]

Business failings?

Education, business, Health, government spending like ndis. The list is huge.

 

[sptrawler]

It's starting to feel very much like ~1990 to me and some very similar things happening.

At a state government level Victoria lead the rush into the abyss back then with Tasmania following. Same's happening now in the same order.

SA doesn't have a bank to go bust this time, but it does have an economically important steelworks in a very precarious position. Not the same scenario but it sure does rhyme.

A string of well known businesses (shops etc) went under back then and same happening now.

I'm paying more attention now than I was back then but it does have a similar overall feel to it. All that's missing is someone big to go bust - thus far we haven't got a Bond or Skase equivalent although I do have suspicions about one particular businessperson (I'll avoid names for legal reasons etc).

For those unfamiliar, it's a bit hard to comprehend just how well known Skase in particular became after the event. Even children were aware of him, it entered popular culture in a way that's hard to fully appreciate if you weren't there at the time.

That plus we haven't had any politicians singing or deadly consumer product scandals come to light yet, at least not to my knowledge.

The similarities are definitely there, a lot of green can dreaming, a lot of people gearing up, a lot of it depending on Government money.

This time it is housing, more so than shares, but the only growth industry is government and that money comes from those who need it to support the bubble.

The Hydrogen dream appears to have burst, the made in Australia hasn't eventuated, so when the Federal and State government subsidies get used up, those projects may well be put back on the shelf.

Lithium is in the toilet, nickel has already been flushed and coal is waiting for its turn, things will need to turn around soon or the government will really have to tighten the belt.

 

[divs4ever]

Do you think Australia is actually cooked at this point and government is just hiding it. I'm seeing huge failings out there at the moment.

am not sure about ( completely, absolutely ) cooked but dancing around on a HOT tin roof , there are plenty of signs , local improvements ( residential and property development ) are stalled , businesses in the main town ( about 12,000 people ) up here closing , renovating , etc .. sure one of them is the Rivers store but they are not unique , just very obvious about the closing down ( the auto electrician is gone several very old businesses and there is at least one vacant pub ( maybe three )

and Brisbane wasn't looking so vibrant when i visited late 2024

hiding it .. that is what Governments do especially in election years

 

[divs4ever]

I'm a little worried albo was dancing around at Mardi gras while the Chinese did a lap round the country with no push back. We are very open to invasion. Hopefully the politicians are the first to go.

we have always been very open to invasion , the Japanese looked us over before WW2 but decided India/Bangladesh and food was more important , and Indonesia has a fragmented society , China knew we were here for maybe 2000 years ( or more ) but couldn't find anything to trade with over here

 

[over9k]

I'm a little worried albo was dancing around at Mardi gras while the Chinese did a lap round the country with no push back.

And herein lies the problem with democracy.

 

[JohnDe]

I went to Bunnings last night, the place was like a ghost town, lucky if there were a dozen cars in the carpark.

My niece is in her third year as a hairdresser apprentice, last night she said that for the first time she does not have a client booking for two weeks. The business has multiple stores and has noted a decline in the more expensive services that they offer.

Australia stuck in ‘retail recession’, warns Country Road owner​

The South African owners of Country Road Group have tagged Australia as being in the grips of a ‘retail recession’ for the last 18 months, amid crashing sales for the retailer.​

The South African owners of troubled fashion house Country Road Group have warned Australia has been mired in a ‘retail recession’ for the last 18 months, but that its business was “absolutely fixable” despite barely being profitable and crashing sales in January.

In an update to shareholders, it was revealed that Country Road Group’s sales collapse had worsened since Christmas, down 7.8 per cent in the 26 weeks to December 29, but accelerating to a sales slump of nearly 16 per cent for the first eight weeks of 2025.

Woolworths Holdings chief executive Roy Bagattini has also conceded that the sale of up-market department store chain David Jones led to higher than expected costs now borne by its sole business in Australia, Country Road Group, with the company pushing through a company-wide restructure to slim its cost base.

Mr Bagattini, addressing analysts and investors overnight from Cape Town, revealed the restructure had touched 80 per cent of roles outside of Country Road Group’s stores and that despite Country Road Group barely profitable and facing diving sales it was “absolutely fixable”.

Country Road’s expansion into new home categories such as candles and scent was proving successful, and the repositioning of its clothing business Trenery was driving strong growth.

He also downplayed suggestions from analysts that it would sell Country Road Group, saying it had been a significant profit contributor to the company in the past and one poor year did not mean it couldn’t perform again and return to better margins.


Country Road’s flagship store is Sydney's CBD. Picture: Britta Campion

But this restructure and long-awaited revival of Country Road Group – whose brands also include Witchery, Mimco and Politix across more than 650 stores – was coming as Australia also faced a protracted ‘retail recession’.

Woolworths Holdings finance director Zaid Manjra reported that Australia has been in a “retail recession” for the last 18 months, with real GDP growth at 32 year lows and persistent inflation and high interest rates dampening consumer sentiment. His presentation explained that around 700 business in the Australian retail sector had filed for bankruptcy in 2024, up 55 per cent.

“A number of businesses including well known brands have been placed into administration or have filed for bankruptcy, of course our business to has been impacted by these market dynamics,” Mr Manjra said.

This showed up in Country Road Group’s interim results with earnings down nearly 72 per cent to $14.2m but adjusted profit before tax sinking 94 per cent to a wafer thin $2.5m.

Mr Bagattini explained that following the sale of David Jones, its Country Road Group was left with “inefficient structures and processes and significantly elevated costs”.

“This business is in the midst of a restructure, a complete overhaul in fact,” Mr Bagattini added, “to reconfigure its operating model and reset its structural economics as a stand-alone business.”

He said this restructure of Country Road Group was being accelerated and has seen four out of five roles outside its stores changed to better prepare the fashion house to perform amid tougher trading conditions and extra costs triggered by the separation from David Jones.

“This is absolutely fixable,” he told analysts as he detailed the restructure process.

“It is an unprecedented degree of change, and in fact the most change this business has experienced in its history. To give you a sense of the sheer extent of it, over 80 per cent of all roles outside of stores have been impacted in some shape or form, whether they have been streamlined and rationalised or whether they are changing scope or whether they are newly created as we invest in new capabilities.”


Country Road Group is being restructured amid a ‘retail recession’ in Australia and is carrying the extra costs of its separation from David Jones. Picture: Andrew Henshaw

Mr Bagattini said the restructure was pushed through in “record time frame” and amid a tough trading environment, which has worsened its recent financial performance.

He said Country Road Group still had good potential.

“It means we are well on track to complete Country Road Group’s restructuring before the end of the financial year, it means Country Road Group enters fiscal 2026 well set up to begin delivering to its true potential.”

This would also see Country Road Group meeting its earnings margin target of 10 per cent, but to return to its previous target of 12 per cent would require an improving Australian economy.

Country Road Group’s house of brands would work harder driving a greater clarity and distinction between each brand, with Country Road’s push into home categories working well and the reset and repositioning of Trenery was delivering growth.

When asked by analysts if Country Road Group still had a future within Woolworths Holdings, Mr Bagattini said it was not up for sale at this time.

“The question around selling an asset or selling Country Road Group in this case naturally does come when a business underperforms. It is important to remember that Country Road Group has been a significant profit contributor to our group for many years, and a bad year doesn’t detract from the long term potential we see in this business.”

Last year, Country Road Group was plunged into a workplace bullying and sexual harassment scandal that punctured staff morale and generated negative publicity for the brands. It has lost a number of senior executives, including the highly respected boss of the Country Road label, Elle Roseby, who later quit the retailer.

 

[sptrawler]

Things have become problematic for elderly tenants.
This morning I was talking to a couple of aged pensioners who have to move out because the properties they rent have sold, one was saying he and his wife are moving into his daughters shed and the other a single bloke is trying to contact distant relatives in Mt Gambier to see if he can move over there.

Sad times, that's for sure. Both use gophers, so they won't be taking much with them. Tell Jimbo it certainly isn't a soft landing for them.

 

[Smurf1976]

At home today so I intentionally went outside and listened.

I can hear the sounds of plenty of work being done, the use of construction machinery, trucks and so on.

That's purely local but the sound outside is definitely closer to "industrial" than it is to "peace and quiet" and it's construction or maintenance work that I can hear and not from any obvious single source.

 

[JohnDe]

At home today so I intentionally went outside and listened.

I can hear the sounds of plenty of work being done, the use of construction machinery, trucks and so on.

That's purely local but the sound outside is definitely closer to "industrial" than it is to "peace and quiet" and it's construction or maintenance work that I can hear and not from any obvious single source.

There's road works at the front of my business, they are widening the local creak and widening the bridge. Started in November, they think they'll be finished by the end of march. I doubt it. This was part of the Covid spend by the government to ensure that the economy didn't die and everyone had a job, it only took a few years after Covid to get started. Imagine if those workers, materials and expenditure was allowed to go to home builds.

 

[wayneL]

I don't think this is news to anyone, but still braceing to see.

 

[moXJO]

I'm seeing families ending up on the street right now. Friend mentioned some guy had hung himself from a tree in open view in his suburb. I haven't seen this type of financial stress since the early 90s. In my opinion it is worse now then back then. People are well and truly stuck in the Web.

 

[JohnDe]

A large multi-national lost a lot of money when one of their clients, a franchisee of a large national brand, managed to convince them to extend his credit by a few months. And then he did a runner, emptied the premises of everything of value and disappeared.

I haven't heard of that since the 1990's 'recession that we had to have'.

Maybe it's just an anomaly, after all we have so much renewable electricity and our governments are doing everything to lower prices, we are in a good place. Or so we are told.

 

[Craton]

@wayneL post above prompted me to DYOR. As per Macrobusiness 28 Nov 2024 and reads in part:

Why Australian living standards have collapsed​

Australians are experiencing the sharpest decline in real household disposable incomes on record, as illustrated below.

The AFR’s Michael Read published the following table showing that Australia experienced the largest decline in real per capita household disposable income in the OECD between Q4 2019 and Q1 2024.

The article lays out these factors.

There are three principal reasons why Australians have experienced the OECD’s sharpest decline in material living standards this decade.

First, as noted above, Australian real wages have grown at a slower pace than most OECD nations.

Second, Australia has one of the world’s highest shares of borrowers on variable mortgage rates.

Finally, the combination of bracket creep (from inflation) and the expiry of the lower-middle-income tax offset lifted the average personal income tax rate to record highs.

Me thinks not much has changed since and possibly even worse despite the RBA lowering the cash rate.

 

[JohnDe]

@wayneL post above prompted me to DYOR. As per Macrobusiness 28 Nov 2024 and reads in part:



The article lays out these factors.



Me thinks not much has changed since and possibly even worse despite the RBA lowering the cash rate.

While reading the AFR this morning, I got to thinking about Australia's compulsory super. 11.5% heading towards 12%, that is a big chunk of wage being locked away for a young person trying to get into the housing market or pay a mortgage.

 

[divs4ever]

While reading the AFR this morning, I got to thinking about Australia's compulsory super. 11.5% heading towards 12%, that is a big chunk of wage being locked away for a young person trying to get into the housing market or pay a mortgage.

and some of it not terribly well-managed despite the fees and charges

but the @qldfrog ( and others ) would know better than me , i saw what was happening in my employer-sponsored super ( in the early 2000's ) and took an opportunity to liquidate my super in 2012 ( and invest it more wisely with just the odd brokerage charge but franking credits to reduce that impact )

 

[moXJO]

Is the only way out a hard landing?
Tinkering round the edges isn't doing Jack.

 

[divs4ever]

Is the only way out a hard landing?
Tinkering round the edges isn't doing Jack.

well i remember a few years back a few veteran commentators had the opinion that the only way out was MAJOR war ( as a distraction , while the debt was moth-balled whilst being inflated away )

so far we haven't had that ( global ) attention-diverting conflict , but that debt overhang has continued to grow and grow , despite other methods

it might be worth contemplating the meanings of 'hard landing ' , a hard default looks like a major taboo among the ruling classes ... maybe they just prescribe us with HARD drugs , so we don't understand what is happening , we must be half way there , as most official data is totally unreliable

 

[sptrawler]

Is the only way out a hard landing?
Tinkering round the edges isn't doing Jack.

Just posted this in another thread, but it is a huge wakeup call that Albo has probably already been given, so it will be interesting to watch all the tinkering and navel gazing virtue signalling morph into something constructive.

In the scheme of things this is huge IMO, it would be like Albo saying we are dismantling the bloatware in Medibank and the NDIS, let's watch this space.

The conservatives in the U.K wouldn't get away with it, same as the coalition here couldn't, it will be interesting to see how it pans out here.
The economy at street level is in for a shock, one way or another, well that's my opinion.
Politicians wanting to polish seats, to pick up a lazy $200k , will be checking the exits IMO.

MSN

www.msn.com

Keir Starmer dramatically scrapped NHS England today as he launched a striking assault on the 'flabby, unfocused and over-cautious' state. The PM used a speech to deliver a damning verdict on the performance of the public sector, saying huge expansion in numbers had not worked. He announced that NHS England, which oversees individual hospital trusts, will be abolished altogether, saying it would bring health provision back under 'democratic control'.

Health Secretary Wes Streeting (pictured) had already declared he would dramatically curb the body - which ministers have labelled the 'world's largest quango'. NHS England is the central bureaucracy that controls more than £190billion a year of funding for health and has 15,000 staff. Its functions will be taken over by the Department of Health over the next two years, with headcount cut by 9,000 - although it is not clear how many of those will be deployed elsewhere.

From the trusted source:

UK politics: Unison attacks ‘shambolic’ announcement of NHS England’s abolition – as it happened

Union says staff will have been left reeling after surprise news that body will be scrapped

www.theguardian.com