It is well recorded and recognised by the broad public that Australia is experiencing its longest period of prosperity since records began. 25 years recession-free since the Paul Keating “recession we had to have”. Between 1991 and 2015, GDP is up +288% nominally. Share-market is up +293% excluding dividends. Sydney property is up +363% excluding rent and this has all been achieved despite population growth of only +37%.

24 YEARS OF GDP GROWTH copyIs this sustainable or are we growing too fast? Are we facing a recession in the coming years or will Australia continue to grow? These are the question on many people’s lips.


It is easy to forget the enormous progress we have made when we are facing short-term challenges. In 1991, interest rates were still relatively high and the employment market was dead in the water. But we naturally worked our way through it and those who stuck to their investment philosophy quickly regained lost ground.

Today, there is every reason to be worried once again. Mining construction is winding up, housing appears expensive and unemployment is showing its first signs of serious weakness in a decade.

We should be thankful that our construction activity remains healthy because this is one of the only things standing between us and our first recession in the 21st Century. At the same time, cash is offering depressing returns and the bond yield curve is flattening.

But why do we worry about these short-term dilemmas and place them under such scrutiny? Surely we can take comfort from the steady line on the GDP chart at the top of this page and stop worrying about the next data release.

Of course it’s easy to say these things in hindsight. We all know that those who picked the GFC saved themselves up to 50% of their life savings, and we would all like to think we can pick it next time. But in the end, GDP will continue moving north and those who live in fear will be left sitting in a bank account and fighting the threat of inflation eroding their capital.

Therefore, take a moment to reflect on the table above and comprehend the economic progress that was made despite a barrage of concerns along the way.

Our biggest worry lies in the 1,113% credit growth which is surely unrepeatable and has wide ramifications for the banking sector going forward. Otherwise, it will hopefully make you wonder where we will be in 2039, and give you comfort to adopt a long-term philosophy which recognises that asset prices will generally track nominal GDP.


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