Australians have hit peak pain. It is now about as tough as it gets for most households. Living standards have fallen at their most rapid rate in modern memory.
But the pain factor is as true for economics as it is of the politics for the Albanese government.
The latest growth numbers in gross domestic product most likely mark the low point for the economy, meaning the first half of this calendar year is going to stay grim.
Coalition claims that Anthony Albanese and Jim Chalmers are presiding over a halting economy with little to show for cost-of-living relief are reasonable.
The country is and has been in a per capita recession for almost a year, masked only by government spending, mining and immigration, which have kept us out of a technical recession at least.
No government should be celebrating a quarterly growth figure of 0.2 per cent, and an annualised growth of 1.5 per cent. By any measure, it is a failure of management.
The exception to this would appear to be the labour market, which continues to prove an anomaly to prevailing economic conditions. Still, with a collapse in productivity, it’s not surprising more workers are needed.
The Treasurer didn’t seem too displeased by the growth numbers, however, coming in as predicted and confirming the trajectory Treasury had been predicting.
This may seem incongruous to the reality that life isn’t going to get any better any time soon for most people.
And it could prove a dangerous misreading of the situation.
It is the second half of the calendar year that Chalmers and the Prime Minister are looking to as the next election looms.
While the economy remains anaemic, wages are growing faster than inflation and tax cuts will begin to kick in from July.
And presumably there will be no more interest rate rises.
The only downside is that borrowers will likely be last in line for relief from any rate reductions, with the RBA unlikely to shift its position that it will be later in the year before it brings out the knife.
Electorally, the politics should – all things being equal – begin to favour the government when it matters.
Households will never recover what they have lost over the past 18 months in terms of household income, but they will have a tendency to look forwards rather than backwards if they feel tangible improvements in personal circumstances.
Still, a lot of things will have to go right for the government for the politics to align with an easing in household pain.
Having managed to keep Dunkley, Albanese and Chalmers will be of a belief that longer-term indicators will eventually point in the direction they want them to.
There is a big but to all of this. And it is something opposition Treasury spokesman Angus Taylor has coined as the confidence recession.
He points to two important numbers. The first is the increase in savings and the collapse in discretionary spending. People only do that when they are economically anxious.
It suggests people are now starting to believe that their decline in living standards is a permanent fixture rather than a temporary one.
People have cut back aggressively in their discretionary spending. But the savings rate of 2-3 per cent needs to be at least double that.
And while this remains, voters have the potential to remain very cranky, and for longer than Labor would hope.
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