May 8, 2019

Australia is fighting to go 28 years without a recession

Illustration: Rebecca Zisser/Axios

Australia hasn't had a recession in 27 years, but economists, market analysts and everyday Australians are starting to worry that things are taking a turn for the worse.

Driving the news: The Reserve Bank of Australia on Tuesday decided not to cut interest rates, which are already at the lowest level in the country's history, holding steady for the 30th meeting in a row. But many expect that it's only a matter of time.

  • "The economy faces a lot of headwinds," Richard Franulovich, head of FX Strategy at Westpac, tells Axios.

Among the most pressing are a declining property market, weak consumer spending, depressed business sentiment and perhaps most pernicious, "the economy is just not generating enough inflation," Franulovich adds.

Details: The country's CPI in March fell to 1.3%, moving further away from the central bank's target of 2–3%. (Inflation hasn't hit 2% since June, which was just the second time since 2014.) Unemployment has picked up and remained stubbornly above 5%.

  • The Australian dollar has been weak against the U.S. dollar and is trading near its lowest level since 2016.
Expand chart
Data: Federal Reserve Bank of St. Louis and Reserve Bank of Australia; Chart: Chris Canipe/Axios

What's next: The flurry of economic weakness has investors pricing in a rate cut by July, but the RBA on Tuesday pointed not to a typical 25- or even 50-basis-point cut but potentially taking rates all the way to 0.

  • Bank of America analysts say its likely Australia will also get a jolt of fiscal stimulus from a new government no matter which party wins the May 18 general election.
  • During Australia's 27-year recession-free run, the RBA has generally held rates higher than the U.S. Federal Reserve, as you can see in the chart above.

The bottom line: Australia has benefited significantly from China's rise, as a major supplier of iron ore and other raw materials to the country. But China's import economy is clearly showing down, evidenced by data Wednesday showing Chinese imports fell for a fifth straight month.

  • With the trade war between the U.S. and China again bubbling, Australia likely will need all the stimulus it can get.

Go deeper: The world can't afford a trade war right now

Go deeper

Trump announces 30-day extension of coronavirus guidelines

President Trump announced on Sunday that his administration will extend its "15 Days to Slow the Spread" guidelines until April 30 in an effort to stop the spread of coronavirus, which has now infected more than 130,000 Americans and killed nearly 2,500.

Why it matters: Top advisers to the president have been seeking to steer him away from Easter as an arbitrary deadline for the U.S. to open parts of its economy, amid warnings from health officials that loosening restrictions could cause the number of coronavirus cases to skyrocket.

Go deeperArrow14 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 5 p.m. ET: 716,101 — Total deaths: 33,854 — Total recoveries: 148,900.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 5 p.m. ET: 136,880 — Total deaths: 2,409 — Total recoveries: 2,612.
  3. Federal government latest: The first federal prisoner to die from coronavirus was reported from a correctional facility in Louisiana on Sunday.
  4. Public health updates: Fauci says 100,000 to 200,000 Americans could die from virus.
  5. State updates: Louisiana governor says state is on track to exceed ventilator capacity by end of this week — Cuomo says Trump's mandatory quarantine comments "panicked" some people into fleeing New York
  6. World updates: Italy on Sunday reports 756 new deaths, bringing its total 10,779. Spain reports almost 840 dead, another new daily record that bring its total to over 6,500.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Trump touts press briefing "ratings" as U.S. coronavirus case surge

Photo: Drew Angerer/Getty Images

President Trump sent about a half-dozen tweets on Sunday touting the high television ratings that his coronavirus press briefings have received, selectively citing a New York Times article that compared them to "The Bachelor" and "Monday Night Football."

Why it matters: The president has been holding daily press briefings in the weeks since the coronavirus pandemic was declared, but news outlets have struggled with how to cover them live — as Trump has repeatedly been found to spread misinformation and contradict public health officials.