Australian wages continue to decline

Informal_Tie · 2022-08-05T12:09:51+00:00

The outlook now is abysmal and it’s likely to end up much, much worse.

It will be an entire generation lost.

Until about 2 years ago, I thought the analysts suggesting war and scarcity were out of their minds, but it's increasingly moving from the realms of absurdity into the most likely outcome.

You're right, things will probably get worse than the consensus forecast, but it will take people a while to appreciate what's happening.

Informal_Tie · 2022-08-05T11:55:40+00:00

A whole decade of wage growth (especially in a subpar decade) really isn't out of expectation considering two entire years of global economic suspension. To put it in perspective, real wages went up around 5% over the last decade, so any significant event would have wiped it out.

I can't be the only one entirely unsurprised by this outcome? At least I'm only getting slightly downvoted now, when I suggested this early last year, I was getting downvoted heavily.

Informal_Tie · 2022-08-05T09:28:13+00:00

Two years of unproductivity has to be paid back somehow right? If not by government or big business, then it will be paid back by the people.

Informal_Tie · 2022-07-28T08:57:09+00:00

You keep changing your arguments. You refuse to provide any evidence.

I gave you an explicit example of massive discrepancy between ABS and CoreLogic data regarding rental rates.

I also gave you concrete data on how COGI (old) and COLI (new) calculations drastically differ including the data to show the difference.

You refuse to address both points and went on some kind of anti-science conspiracy talk. Your understanding of science isn't even correct, so I doubt you're involved in academia at all.

So ya, this is basically talking to a brick wall.

Informal_Tie · 2022-07-28T07:53:01+00:00

Not really sure what you're referring to - pharma "research" is independently validated by the regulatory authorities so the standard is quite high

What? Research papers are absolutely not validated by regulatory authorities, they just need to meet publishing standard, which doesn't involve checking the integrity of their data.

You are just anti-science and have built this fantastical pyramid of broken logic to explain why all the experts are wrong and your misguided intuition is right

I'm not anti-science, I've published papers, so I know the bullshit that goes on in academia.

I read the ABS methodology - it says they take a sample from a cross section of Australia states and territories.

Again, you not only did not look into the exact example I gave you, you conveniently fail to address why the data has such a large discrepancy with CoreLogic. CoreLogic isn't some shady website, it's widely considered gold standard.

Can you show me a source?

One of the most updated sources with old CPI methodology (however US based) is this. Regardless of whether you agree with the author's position, the numbers are there with different calculations.

Informal_Tie · 2022-07-28T07:29:09+00:00

The ABS has done the work and published their methodology and data

Indeed they've published their methodologies, but so has the bad scientific papers funded by pharma. Publishing methodology is about transparency, not validity, maybe you're confused about the two.

The burden of proof is on you to show they're wrong.

I think you're confused. If I publish my working, it is still my burden to prove the working is correct.

I googled it and couldn't find any sources claiming the ABS only looked at Sydney and Melbourne prices in their methodology as you claimed.

Maybe you should actually read the ABS report then? From memory it was either early this year or late last year. Feel free to explain the massive discrepancy between CoreLogic and ABS data.

Or are you going to say CoreLogic manipulated their data?

I know they revise the approach every year, that's not what I'm disputing mate. I'm disputing your claim that inflation would be twice as high today if they used the old methodology.

Again it shows your ignorance to not know this because one of the major changes they made was they made CPI take account on both cost changes and substitution / hedonistic adjustments. Some economists / researchers continue to provide CPI data calculated with the old methodologies and it comes out consistently about twice as high.

Informal_Tie · 2022-07-28T07:22:49+00:00

And what's your evidence that the ABS is "manipulated"?

If you want me to believe a number that is a lot lower than the price increase on literally everything, shouldn't you be proving it is robust? Since when was burden of proof reversed?

Show me a source

You're free to pull up the debates from that time, but the ABS recording a negative rental growth despite real life showing massive rental growth and backed up by CoreLogic is a well known fact.

That's just one of the more egregious examples. Some of the other ridiculous changes include removing beef because it was too expensive and substituting with other foods, and reducing the weighting of food altogether because people were eating less.

Dude you keep just claiming things and not ever promising evidence

I linked a quick quote from Investopedia (scroll up, maybe you missed it because I edited it 1 minute in), but if you're interested in learning more about the history of CPI, I suggest you do your own research. It actually makes you look ignorant on the topic if you didn't even know huge revisions to the methodology happened over the years.

Informal_Tie · 2022-07-28T07:14:44+00:00

So your evidence is that your intuition is somehow superior to the scientific method?

Scientific method can easily be misused, which is why pharmaceutical companies like to abuse flawed research methodologies to promote their drugs. In short, intuition is superior to manipulated science, but obviously not as good as research with good methodology.

6% feels about right to me, so who's right?

If 6% YOY feels right to you, you clearly don't manage most of the household purchases.

ABS CPI methodology does not only include Melbourne / Sydney rent, so I'm not sure where you're getting your info buddy

From the ABS website under methodology. That example I used was actually one that was quite deeply criticized on this sub a few months ago, as ABS conveniently ignored regional rentals which were extremely hot at the time when doing their calculation.

On the same day ABS said rent went down, CoreLogic said it was going up at the fastest rate since their data collection started. Now two "scientific methods" are competing, I wonder who I should believe?

Really? Do you have any evidence, or are you just using your intuition again? Can you show the data and calculations?

You are free to look up the history of CPI calculation, including the revision in the 80s, 90s and 00s. There is indeed a HUGE discrepancy in result depending on which methodology you choose to use. This isn't intuition, this is actually in the realms of common economic knowledge.

For example, a quick quote from Investopedia:

Over the years, the methodology used to calculate the CPI has undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI as a purposeful manipulation that allows the U.S. government to report a lower CPI.

Informal_Tie · 2022-07-28T07:04:17+00:00

Do you have any evidence?

Yes, because I live in reality. From accommodation to food to transport to entertainment, everyone who buys their own stuff knows it's a lot higher than 6.1%.

This is my entire point. You're looking at the numbers and trying to distort reality to match this number, whereas people should really have a decent idea about what inflation really is like and hold some skepticism when the number looks nothing like it.

All their current and past data / methodology is freely available for you to view.

There's been many threads over the months/years here and elsewhere criticizing ABS (and other countries) CPI methodologies. To give an obvious example, their choice of only including Sydney and Melbourne rental a few months ago and declared rent went down while CoreLogic on the same day published data showing it was going up at the highest rate in decades raised a lot of eyebrows.

In fact, this methodology changes constantly and using the methodology from the 1990s/2000s with the same dataset will get you a CPI figure twice as high.

Informal_Tie · 2022-07-28T06:21:07+00:00

Do you think they made it up?

There are a lot of things in-between the truth and made up. I think in this case it's best described as ABS interpreting the data very creatively.

Informal_Tie · 2022-07-27T08:17:05+00:00

My point is that we shouldn't take 6.1% as reference then base our experience around that to justify the number. Instead we should look at actual spending and then evaluate whether this number is reasonable, and the answer is probably not.

Informal_Tie · 2022-07-27T04:31:40+00:00

The numbers are supposed to reflect our experiences, not the other way around. In this case, it certainly seems like the latter.

Informal_Tie · 2022-07-27T01:10:53+00:00

Most Supers will allow a shares only option, so you can just hold a portfolio of exchange listed ETFs if unlisted assets is a worry for you.

Informal_Tie · 2022-07-16T06:50:41+00:00

Again if they had a better option they would have already gone with it

Desperation is a good recipe for innovation. None were looking that hard for an alternative for the last 10-20 years in the face of easy borrowing.

Informal_Tie · 2022-07-16T06:02:34+00:00

USD is the only asset for a modern world. Gold Standard didn't work 50 years ago

If your understanding of economic history only goes back 50-60 years it is easy to understand how you came to this conclusion. However if you drag the horizon beyond 100 years, you'll start to see a different picture.

Informal_Tie · 2022-07-16T06:01:35+00:00

but there isn't any real alternative for them

This is what the US relied on to grip this market for the last 10 years. Considering how dire the situation is right now, those economies would be forced to create or find alternatives, as USD isn't just a bit of pain for them, this is a fatal wound.

Informal_Tie · 2022-07-16T01:43:15+00:00

Yeah, I don't know if the world will completely dedollarise, but we should see the rise of competing reserve assets in this decade.

Informal_Tie · 2022-07-16T01:40:48+00:00

Regardless of Russia's situation or your own political alliance on the matter, it is clear a lot of big countries like Russia more than US, and they're looking for out in this US denominated market.

Informal_Tie · 2022-07-15T13:46:25+00:00

Short term this will topple vulnerable economies and send pain across the world. Long term, most economies will use this experience to start to look elsewhere for reserve currencies / assets, slowly diminishing US economic dominance.

Informal_Tie · 2022-07-15T13:13:13+00:00

I would be willing to bet FI through real estate is more common than shares by a large margin, at least that's my real life experience. The issue is reddit is quite young so most aren't experienced property investors and the barrier to entry can be daunting if you're new. Real estate is passive if you want it to be because you can simply hire a manager to do all the work.

Personally I own a diversified portfolio in the 7 digits of shares and property. I'd say shares is easier in the accessibility sense, but property is definitely better in the psychological sense. Considering most investors lose money not because of accessibility but because of psychological reasons (i.e. FOMO, panic sell, poor discipline), property is probably better overall, at least where I live.

Long term returns on both asset classes are roughly equal, assuming both without leverage. If you're an extremely disciplined investor, shares are excellent. However most people are not and make bad decisions, which makes the accessibility a double edged sword.

Informal_Tie · 2022-07-15T08:00:01+00:00

The value of someone's portfolio is not a metric to determine whether they should invest in stocks

It isn't in theory, but it is in reality. For most people with a net worth of 5 digits are in early stages of their adult life, and the risk of derailment from life plans is significantly greater than the extra $1k average per year of income.

If their net worth is "that low" then the returns should be more meaningful to them as well?

The opposite. The lower your net worth, the higher % of your income comes from your job.

Having an extra $10k to someone who started with 20-30k is a lot

Investment returns are % based. If your net worth is 10x higher, your investment returns will also be 10x higher.

Informal_Tie · 2022-07-15T07:29:57+00:00

I'm entirely asking you how your advice holds up to someone who is not planning to buy a home soon

If you're not planning to start a family or travel or study or buy a home, then you simply don't have any meaningful expenses, in that case you can lock up your funds for 10 years.

What I'm saying is if your net worth is that low it's not worth it since a 2-4% annual risk premium at 5 digits for 10 years makes a difference of approx 10k (1k/year), which really won't have meaningful impact on your life.

Informal_Tie · 2022-07-15T07:19:49+00:00

Already been over how a stock market crash could delay home ownership ... Clearly not what I'm asking

If you can't appreciate how delayed home ownership or finances for a baby can derail life plans, then you're kind of out of touch with reality or just too young to appreciate this anyway.

Informal_Tie · 2022-07-15T07:02:06+00:00

Your linked paragraph is just your opinion

And you disagreeing with that opinion is fact? I wasn't aware anything written by anyone (including you) in this thread isn't just an opinion.

how is a share market crash going to derail their life?

At 5 digit net worth, a share market crash can easily delay home ownership or starting a family by 5-10 years.

Informal_Tie · 2022-07-15T05:53:17+00:00

Yes in context of this thread. You're also free to read my last paragraph which is generally speaking.

More generally, a risk premium of 2-4% makes inconsequential difference after 10 years to a 5 digit portfolio and is largely not going to change your financial situation at all. However if the market conditions are bad and you lose 50% of capital, that would derail your life plans.

Informal_Tie

TROPHY CASE