While the voting public are a very long way from falling in love with the Albanese Government, the economic ingredients for a successful re-election campaign have been belatedly falling into place.

After a very lengthy cost of living crisis during which Australian living standards had been falling in real terms, the Australian Bureau of Statistics has found that this per capita recession has finally lifted.

The Australian economy expanded by 0.6% in the December quarter which lifted annual growth to 1.3% – far higher than the 1.1% assumed by the Reserve Bank when it released its February monetary policy statement and cut official interest rates.

While that 25 basis point cut by the Reserve Bank in February looks like being the only cut before the Federal Election, at least the two major economic tailwinds are finally blowing in the correct direction.

Chalmers loads up some campaign ammunition

That will be a major relief for the Government’s chief salesman, Treasurer Dr Jim Chalmers, who can now campaign strongly with the news that interest rates and economic growth are both heading upwards.

The rise in economic growth was the strongest quarterly improvement since the December quarter of 2022 with the rate of annual growth increasing for the first time since early 2023.

GDP per capita, which is a good proxy for household living standards, grew by 0.1% after households had endured a horror run during the period of high inflation, rapidly rising interest rates  and a punishing cost of living crisis.

Retail spending starting to emerge

Another positive sign reported by the Australian Bureau of Statistics is that households are finally starting to spend, with the amount leaving their wallets rising by 0.4% in the quarter, partly reflecting successful sporting events such as the Australia India test series which drew record crowds.

The government sector might still be representing around half of the economic growth being recorded but the private sector is starting to have an impact over the top of heavy infrastructure spending by the states.

Already Treasurer Chalmers is claiming a private sector turn around and we can expect to hear a lot more of this message as the federal election moves into the official stage.

On top of the turn around in economic growth, some of the other selling points will include real wages still rising, unemployment remaining low with a record number of people in work and the continuing impact of falling interest rates and tax cuts.

Savings starting to improve

Even household savings have started to increase marginally which suggests that at least some of the Stage 3 tax cuts which started to filter through to pay packets from July 1 are being stashed in bank accounts.

Of course, international factors will also play a part with punishing tariffs threatening to impinge on an otherwise improving Australian economic outlook.

An enduring tariff war between big players such as China and the US will certainly be a very sobering backdrop against which to campaign that happy days are here again.