Whew! Australia, we’re finally back ahead of where we were in 2008

OUR personal disposable income is finally back to where it was in 2008. This is the first economic good news story in quite a while.

Our per capita disposable income is finally on the rise again.

TWO steps forward, one step back. That’s the way it goes.

The good news for the little nation we call Australia is our step back is over. Real National net disposable income per capita is back above the level it first reached in 2008.

We’re finally on the up and up.

We first hit that point way back in 2008 when Kevin Rudd was looking forward to a long and happy stint as PM. We slumped in the GFC, got cracking again and blazed past that level in 2010. Then we faded away, especially in late 2014 and early 2015 as something undid all the good work. (The Abbott government’s fiscal incompetence, do I hear you suggest? This is neither the time nor the place for such speculation …)

Anyway, it looks like the corner has been turned again. We are back on the up and up. And in the metric that matters.

All the economic growth figures came out on Wednesday. You might have seen the headline figure about GDP growth of 3.3 per cent. Pretty strong, huh? But it doesn’t match the way the economy actually feels.

GDP growth is not the one that hits you in your real life. GDP has gone up pretty much uninterrupted for 25 consecutive years.

Not much changes in the GDP department. There wasn’t even a blip for the GFC.

Real national net disposable income is a bit more sensitive, for many good reasons. Here’s a few of them:

• Real means it’s adjusted for inflation;

• Per capita means per person, so it doesn’t just zoom up when the population increases; and

• National means it excludes the income that goes to foreigners.

It’s the measure of income that matters. The Treasurer doesn’t like to talk about it too much, for obvious reasons. He’d like to focus on the numbers that always go up.

So we’re back ahead of 2008 again in terms of actual money in Australian pockets. But that’s not the only sign our game of economic snakes and ladders might have finished its recent serpentine phase.

The savings rate has also fallen back below 2008 levels.

For the past eight years Aussies have been saving up like bunch of squirrels petrified that winter is coming. It has been a clear sign we lack faith in the future. But that is fading.

The fact that we’re saving less is actually a good thing.

I’m not going to overstate this — the savings rate is still high and that makes sense. There’s no shortage of risks out there — China and house prices are the big ones. But if you only focus on the risks, you never notice those happy little moments when things are chugging along OK.

Like farmers. They are probably dancing in their paddocks. Agricultural income is looking especially perky this year.

Our farmers are doing pretty well right now.

Wholesale trade is also doing well and so are quite a few other industries. It’s not all bad just now.

And for everyone reading this story in the West? I’m sorry. I’m sorry for spending the whole article talking about how things are going OK. When clearly, in WA, they aren’t. The economy is going about as well as Fremantle Football Club and the reversal of fortune has been almost as rapid.

The housing market is stuffed, the terms of trade fell 5.4 per cent last year and the economy is shedding jobs — things are not pretty. I’m not sure what to say except that over here on the East Coast we were very envious of you for most of the past 10 years so we know how it can be.

Jason Murphy is an economist. He publishes the blog Thomas The Thinkengine. Follow Jason on Twitter @Jasemurphy