"Millennials' income shrinking, Goldman Sachs expects Australian economic growth to be dragged down"

Goldman Sachs Group said that the actual average disposable income of Australian "millennial" households (aged between 29 and 43) has experienced the largest decline in the past two years, leading to a downward revision of expectations for the country's overall economic growth. Goldman estimated that the actual income of millennial households has decreased by 9.4% over the past two years, the largest decline among all age groups. Economist William Nixon wrote in a report to clients on Friday, "While inflation is the biggest obstacle faced by all households, young and middle-aged families also face significant obstacles brought about by tax hikes and interest rate increases." He stated that spending on discretionary items by this group is "disproportionate. Nixon added, "We note that in the coming months, there may be a turn towards risk by the central bank, while signs of weak consumer spending, slowing wage growth, and rising unemployment also suggest this." The Reserve Bank of Australia is set to hold its next meeting on September 23-24, with markets widely expecting the bank to maintain interest rates at their 12-year high of 4.35% and stick to its hawkish rhetoric. Nixon said that lower starting income levels mean that the recovery in consumption may be slower than previously estimated by Goldman, and recent tax cuts by the government have had "limited impact." Therefore, Goldman has revised down its forecast for total annual consumption growth in 2024 from 1.1% to 0.9% and for 2025 from 2.2% to 1.5%. Both figures are lower than the Reserve Bank of Australia's estimates of 1.5% and 2.8%. The bank has also lowered its forecast for Australia's GDP growth in 2025 from 2.3% to 2.0%, again below the central bank's expectation of 2.5%. Goldman has maintained its forecast for 2024 at 1.2%, stating that increased government spending may offset weak household consumption in the short term.