Australia Faces Economic Storm After Skipping Growth Boom

Australia's economy is experiencing a slowdown after skipping the growth boom experienced by other countries. The country's GDP per capita, which measures economic output per person after adjusting for inflation, has fallen for two consecutive quarters, meeting the definition of a recession. In contrast, the US economy is expected to grow at an annualized rate of 5% in the September quarter.

The yield curve in the US bond market has inverted, with short-term bonds paying more than long-term ones. This inversion has preceded each of the last eight US recessions since the 1960s. The Federal Reserve's decision to raise interest rates for the first time in three years has contributed to concerns about a potential recession.

Australia's central bank, the RBA, is likely to increase interest rates to 4.6% this week, which would be a 15-year high. Underlying inflation in Australia is running at 3.6%, higher than most developed economies. The country's government spending has been identified as a major contributor to inflation, with federal spending reaching 26.9% of GDP last financial year.