We are about to find out, "officially" whether we are on the edge of recession.
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The national accounts, due out mid-Wednesday, will either show that spending and incomes and production continued to grow in the three months to December, or that they fell.
If they fell, it would be the first of the two strikes needed for what people call an official recession. The second would be a fall in the following three months, the so-called March quarter. If we get two in a row, all manner of people, most probably including the treasurer, will declare it a recession.
The truth is there's no official definition of a recession.
The idea that a recession meant two consecutive quarters of shrinking spending and income appears to date back to a 1974 New York Times article written by a US business cycle expert Julius Shiskin.
He said two quarters of shrinking economic activity was one of the criteria that could be used to decide whether or not an economy was in recession, a pronouncement subsequently latched on to by journalists all over the world who made it the definition because it was simple.
It leads to nonsensical conclusions.
The other truth is that, for practical purposes, we are already in a particularly bad recession, and have been for more than a year, for reasons I will explain.
First, the nonsense brought about by the simple so-called "official" definition.
34 years ago, after the release of the September 1990 national accounts on November 29, Treasurer Paul Keating declared they showed Australia in recession.
He added: "the most important thing is this is the recession that Australia had to have".
The political reverberations haven't stopped. But the recession did. It vanished soon after, as what had been a small decline in economic activity followed by a big decline got revised to become a small increase followed by a big decline.
The Bureau of Statistics revises the national accounts as a matter of course, each time new information comes in.
Its revisions moved Australia's early 1990s recession to the March and June quarters of 1991, meaning we can't date the "official" early 1990s recession back to when Keating declared it was official.
Because the difference between a small fall in economic activity and a small increase is small, recessions can appear and then disappear. A "recession" briefly appeared after revisions to the 2000 national accounts under prime minister John Howard and treasurer Peter Costello, then disappeared after further revisions.
In the US they're not nearly as mechanical. There, there is no such thing as an official recession until a committee of elders convened by the National Bureau of Economic Research says so. Its proclamations have broad support.
The figures due out on Wednesday will give us an indication of whether ordinary Australians are better or worse off if we know where to look.
The first thing to do is to put to one side the headline increases or falls in gross domestic product (GDP) which is spending and income and production over the entire economy each three months.
They show GDP growth weak before the pandemic, very weak during lockdowns (shrinking for two successive quarters) then strong as lockdowns ended, and exceedingly weak since.
But this tells us little about spending and income per person, which is how each of experiences things.
Adjusted for our current very high rate of population growth, GDP per person is extremely weak. It's been falling or barely growing for three quarters now.
And even this doesn't tell us enough. What matters most - for us - in the view of Chris Richardson, formerly of Deloitte Access Economics, is real household disposable income per capita.
Unfortunately, the Bureau of Statistics doesn't display this on its website, but it's easy enough to calculate from the bureau's spreadsheets.
It's the income accruing to households adjusted for the prices paid by households, and then adjusted some more.
The Bureau also subtracts taxes paid (which have climbed because of the expiry of the temporary tax offset in mid-2023) and then subtracts net interest payments, most of which are mortgage payments.
Richardson says in public presentations he refers to real household disposable income per capita as "living standards", because that's what it measures.
It shows that weak spending, rising prices, a greater tax take, and much greater payments on mortgages have been shrinking living standards for two years.
That's how it has felt for two years, even if the way the pain has been spread has been different than in the past.
Whereas previous dips in household disposable income per capita have been accompanied by high unemployment, concentrating the pain in the unlucky group looking for work at the time, this dip has been accompanied (so far) by low unemployment, pushing more of the burden onto working taxpayers.
Looked at through a longer-term lens (the longest the bureau's spreadsheets allow) the latest dive in real household disposable income per capita is the biggest in half a century.
The broad picture is of fairly steady living standards until the mid-1990s, accelerating living standards during the 2000s mining boom, and then fairly flat (rising slowly) after the 2008-2009 global economic crisis.
They jumped for a bit during the COVID lockdowns, because of all the government assistance, and have been diving since.
It's why the presence or absence of an "official" recession is likely to make little difference to Treasurer Jim Chalmers as he prepares this year's May budget.
He knows things are going backwards whatever the headline figure released on Wednesday says.
Peter Martin is the business and economy editor of the Conversation and a visiting fellow at the Crawford School of Public Policy at the Australian National University. He is a former economics editor of The Canberra Times.
Peter Martin is the business and economy editor of the Conversation and a visiting fellow at the Crawford School of Public Policy at the Australian National University. He is a former economics editor of The Canberra Times.
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