Adelaide people have slashed spending in response to rising prices, stagnating or falling wages and record debt.
Its due, in large, to Adelaide people’s perception of the economy.
Foul weather, Algae blooms, serious economic issues in Port Pirie and Whyalla, the possible sale of Santos and flat wages, have closed wallets and purses.
If everyone cut their spending back to the basics, and did it immediately, the result would be an almighty recession and probably a depression.
Adelaide businesses would slash investment spending in response to the sudden drop in economic activity and prospects for future sales of their products.
As for employment, forget it.
You’d see jobs go from sales, supply chain workers and people throughout hospitality – which has been happening.
It’s a major issue for South Australia.
What you’d see is what economist John Maynard Keynes called the ‘paradox of thrift’.
“Because one household’s spending is, in effect, another households’ income,” he said.
“If all households try simultaneously to increase their saving by reducing their spending, no-one will be able to increase their savings because everyone will experience a large drop in their incomes.”
You’ve also go the slightly bonkers ‘No Spend September on social media which encouraged followers to cut discretionary spending.
That includes coffees, streaming subscriptions, online purchases and takeaway food, while still allocating budget for rent, groceries and necessary expenses.
All good, says SA Centre for Economic Studies
Economists from the University of Adelaide say that household spending in South Australia is finally showing signs of recovery after an extended period of weakness.
“Cost of living pressures, which have eroded disposable incomes and dampened consumer confidence, are gradually easing with the inflation rate now running below wages growth,” says Jim Hancock, SA Centre for Economic Studies (SACES) Executive Director at the University of Adelaide.
“In addition, solid employment growth and recent interest rate cuts are helping to restore household incomes.”
“Employment has grown strongly over the past year. Although the unemployment rate has edged up, this is the result of increased labour force participation with more people entering the labour market and actively seeking work.
“Underemployment has declined and the State’s labour force underutilisation rate – the combined unemployment and underemployment rate – is down to its lowest level since the 1970s.”
SACE is funded by the SA Government.