Interesting chart from Stephen Letts at the ABC:
Household consumption is growing at a faster rate than disposable income, with savings rates (net savings / disposable income) falling. This is clearly unsustainable. Savings rates, which include compulsory super contributions, fell to just 1.0% in Q2, with savings outside of super being rapidly eroded.
That relationship is even more unsustainable now house prices are falling, according to Deutsche bank’s Phil Odonaghoe.
“Strengthening housing wealth accrued by the household sector has been an important factor supporting the decline in saving. With house prices now falling, that support has been removed.”
Hat tip to Macrobusiness.