Transcription
Australia is at risk of stagflation. The labor market is starting to show some cracks because the economy is tipping into a downturn.
Trade and economy is facing a stuttering slowdown. Australia could be just weeks away from its worst economic fallout in decades.
Australia is meant to be the lucky country, but right now people don't feel so lucky. The lucky country was actually a book written about Australia in 1964, but it wasn't about lucky in the terms that we know. The book's a story about how we're the lucky country, but that makes us dumb because we're allowed to make dumb decisions.
And 60 years on, the data is telling us a story that nobody in power wants to talk about right now. This situation we find ourselves in is not bad luck. It's about choices.
All right, let me just run through some stats really quick here. GDP looks fine on the surface. Politicians are proud of it. They won't tell you GDP per capita, that's per person, fell nine out of 11 quarters over 3 years. That growth was driven entirely by population and government spending. Nothing to do with productivity.
In 2024, Australia's GDP per capita was 0.8% year-on-year versus America's 3.1% year-on-year. Economists call that a per capita recession, but really, mass media doesn't like to say those words.
Manufacturing at record low 5% of GDP in 2025. We make nothing anymore, that's no surprise. UK deindustrialization, we're on parallel with them. We're doing the same thing, but now we're doing it faster.
Okay, the property trap. We all know this, but I'm just going to repeat it. Australia has channeled so much of their wealth into one property class. 2 million plus Australians own investment properties. The tax system has been rewarding it. Obviously, that's that's changing now, but the negative gearing, the 50% CGT discount in 2023 was estimated to have lost $10.9 billion in tax revenue. That's just 1 year, guys.
Sydney median household price $1.607 million. That's of March 2026 from CoreLogic. At the same time, the multiplier on household income is 13.8 times. So, median household income times 13.8, that'll get you $1.607 million. If you want to compare this internationally, look at the UK. They're at eight times earnings, and they're calling it a national crisis already. Sydney 13.8, that's a massive difference.
If we want to go to home ownership, we can look at Census data for that. We can see that in the cohort of people aged 25 to 39, there's a 55% ownership rate versus 66% when boomers were the same age. Let's not talk about the amount of debt they're in yet because there's a massive difference there. Those aged 30 to 34 specifically are down 250% from 64% in the early 1970s.
This isn't avocado on toast, guys. We're past the point now of that narrative being avocado on toast and young people are wasting all of their money. And by the way, millennials now are into their mid-40s, and the younger generation have it much worse.
We have an energy problem, too. People want to talk about energy in traditional ways, which I'm about to get into, but energy drives everything. If we don't have any energy, then society is going to get punished. Take that for what you will, but there's plenty of examples globally of that.
Let's zoom into home. We're one of the world's largest liquid natural gas exporters. We're sitting on all of this coal, all of this gas, all of this uranium. Yet, Aussie businesses pay three to four times more than US companies.
Manufacturing is a record low 5% of GDP. We got smelters closing. Heavy industry is basically dead already. We dig up the gas and the coal. We ship it overseas for cheap and then we buy back the finished goods made with all of that stuff. It makes no economic sense. It's the exact playbook the UK used. They shut their industry down based on the green targets that they had. A lot of Europe did this. They export their emission to somewhere else and the jobs as well. And that's what people don't understand. We're We're buying back this stuff from China that we used to make before and China is still doing the polluting because they need to put the energy in to make all of this stuff and then pollution comes out of that energy.
We clearly have a planning problem with our governments and our bureaucrats. Let's go to housing. 1.2 million new homes by 2029 they said. Current forecast they reckon they're 262,000 homes short. No one will verify that using those figures and then adding on the increased population growth which they said was going to peel back to normal amounts which has never peeled back to normal amounts. When I say normal I mean pre-COVID amounts.
In Australia for larger developments the approvals process often lasts longer than the building process. Just think about that for a minute. In Victoria anyone can object to any planning permit anywhere in the state. Now I get that that has a benefit but you got to look at the other side. It's slowing down things a lot. On a local level you've got NIMBYism built in so they don't want the housing and then the the federal government wants the housing but the local government are holding up the approvals process. So we have some real structural problems about solving the problems of the nation.
We can understand to a certain degree what needs to happen although I would argue at that but let let's say we can agree with what needs to happen. It doesn't mean it will happen though because of the things we've just said. We are looking at a lost generation. I don't like to say things like lost generation lightly because it means for those guys they don't see the opportunity and they don't see the hope. And throwing that label on a whole generation, I don't think is helpful. But, let's be honest, youth unemployment is around 10%, which is double the national rate. We've got 288,000 Australians, young Australians NEET. So, not in education, not in employment, or not in training.
27% think a degree is very valuable and 76% say it's too expensive. At the same time, starting salaries in things like law and finance are flatlining in real terms and that's going to continue with AI. HECS costs are up 53% for some courses. The math just doesn't work here, guys. People are checking out. They're checking out of this system and it's not good.
We're in an environment where it's a zero-sum game. Our per capita growth has basically stopped. The politics has even stopped framing things from how do we get ahead? Everyone's thinking in terms of where's my slice and where that's going. The middle older Aussies that are trying to protect property values and franking credits and superstructures and stuff like that. But, at the same time, the younger Australians are just trying to go, "Well, throw us a freaking bone here." We're at this point where the political system is favoring the older cohort, but the younger cohort don't get a look in.
Like I said, I'm 43. Like your average 43 person looks like a couple with a young family. They're not exactly shooting lights out. They've got more debt than what previous generations had. And the cost kept going up. When we're talking about older generations and younger generations, younger generations are still anyone below mid-40s. So, it's most of Australia, the majority. I would make that argument that it's the majority of Australians.
We have this promise of a 6.2 trillion or whatever the number is. They call it like a transfer of wealth. So, everything's going to be all right, everyone, because we've got the 6.2 trillion dollar transfer of wealth. Who gets the wealth? We're in an environment where the rich are getting richer and the poor are getting poorer. So, you can be sure as hell that if you're getting less wealthy in this environment, you're not just magically going to get more wealthy. That 6.2 trillion going to be distributed in the same way, or actually worse. It's going to be more distributed to to the wealthy if things keep happening.
The tradie on 150 grand a year who just goes to work, wants to raise a family, can't figure out why he's still struggling earning 150 grand a year. We We're in this trap where we're pushing up the numbers, but the value is not increasing. And actually, it's making the value worse because we're pushing up the numbers. More people are in more debt. All of those interest payments, all of those debt repayments are now no longer in the economy. They're going out of the economy, and that's what people are feeling.
We've created a bunker economy. Feels safe on the inside, but brutal to get in. And the people inside that bunker are voting to keep the door shut. As always with my topics, people go, "Yeah, well, I'm on board with this, but what's the solution?" There is no solution. That's why I push personal responsibility. Look after yourself. Look after your own kind. Understand the world we live in. Understand why generational wealth is going to be important. Don't play the old game of trying to get in all of this debt to get all of these tax benefits and play the property casino unless you're a serious player because, again, the guys in the middle are going to get crashed here. The elite guys, the guys that are taking all of the wealth, they're not playing all of these games where they're leveraging up to their liabilities. They They just not doing it. They don't need to do it.
And so, how I think this is going to play out is in catastrophe. I don't like to say that. I've been saying on this channel for a while now, a number of years, that nothing stops this train. The way our systems have been hijacked, Adam Smith in the 1700s said, "If capitalism is taken over by monopolies, then it's going to cook the whole thing." The whole thing is cooked right now. I think we need some sort of revolution in the West. I think some sort of collapse, some sort of civil war somewhere, hopefully not here, probably not here judging on things. I think that's what's going to happen. I'm always hopeful, but I'm planning for the worst and the other side of that is not good. The other side of that is Argentina. The other side of that is generational poverty because the corruption is so embedded that the system cannot break out of it. I think we we can break out of it, but only after some real hits the fan.
So, anyway, that's me for today. I hope you really got some insight out of that. The reason I do this channel is so that you can look at the world for what it really is and that helps you build a narrative and that empowers you to make decisions for you and your family going forward. Cheers.