Australians under 45 wouldn’t remember what it was like being a young adult searching for work during a recession.
Before the internet existed 28 years ago, teenagers reconsidered the popular option of leaving school at 16 and started enrolling in university as more than a million people were left unemployed.
Mobile phones were luxury items the size of bricks.
The Divinyls and Girlfriend topped the music charts, and The Simpsons was a brand new TV show.
The jobless rate also had surged to double-digit figures within months after interest rates had peaked at 18 per cent.
While 1991 may be a distant memory, economists in 2019 are warning Australians to brace for a recession during the next two years as sharp falls in Sydney and Melbourne house prices threaten to spark an economic disaster.
Australians under 45 wouldn’t remember what it was like being a young adult searching for work during a recession (school leavers in 1991 at Chatswood in Sydney’s north pictured)
AMP Capital chief economist Shane Oliver said the 1991 recession deterred teenagers from leaving school at 16, and even inspired many of them to go to university.
‘It was extremely difficult for young people to get into the workforce and it was arguably a motivator for many young people to stay at school longer,’ he told Daily Mail Australia.
‘Also, that period ushered in a growth in the university sector.’
Men in their fifties in unskilled work were retrenched, with many of them going on the dole or disability pension until they were old enough to get the retirement-age pension.
‘That was a very difficult time for Australia,’ Dr Oliver said.
‘That was a time of very high unemployment, there were a lot of people being made redundant.
Back when mobile phones were luxury items the size of bricks, the jobless rate had surged to double-digit figures within months (Sydney op shop in early 1992 pictured)
‘A lot of older Australian men in particular, 55 and over, that was the end of their career.’
Back in the June quarter of 1991, when Australia was last in recession, unemployment had climbed to 9.9 per cent, a sharp rise from 5.8 per cent just 18 months earlier.
The Australian economy had also contracted in late 1990, prompting then Labor treasurer Paul Keating to memorably declare: ‘This is the recession that Australia had to have.’
By December 1992, the jobless rate hit 11.2 per cent, the highest level since the 1930s Great Depression, even though the economy was no longer officially in recession.
The official ranks of Australia’s unemployed stood at 960,000 and climbed above one million in early 1993.
In the era before the internet, job seekers placed signs on telegraph polls hoping to attract attention (plea for employment outside Parliament House in Canberra pictured)
The official Australian Bureau of Statistics figures don’t account for those who have given up looking for work, a situation known as hidden unemployment so the jobless tally could have been much higher.
During those desperate times, the jobless bought secondhand clothes at op shops and put up signs with their telephone number on telegraph poles in a desperate bid for work.
This didn’t stop Mr Keating, who was by now Prime Minister, from winning the March 1993 election, giving Labor a fifth consecutive term after his Liberal Party opponent John Hewson proposed a 15 per cent goods and services tax.
The Australian economy turned sour after 1980s banking deregulation led to a boom in business lending and loose credit standards.
Back in 1989, when tycoons Alan Bond and Christopher Skase were multi-millionaire media moguls, interest rates as set by the Reserve Bank of Australia had soared to a record 18 per cent.
The cash rate during the 1991 recession remained in the double digits at 10.5 per cent, despite a series of rate cuts.
Sydney’s median house price plunged by 9.6 per cent between 1989 and 1991, which was a record fall until the present real estate downturn began in 2017.
Australia has avoided a recession for a record 28 years, overtaking The Netherlands 26-year milestone in 2017.
The national unemployment rate of five per cent is also close to full employment, the level where a lower jobless rate traditionally pushes up wages and causes problems with inflation.
Interest rate are also at a record low of 1.5 per cent.
Despite the long-run of prosperity, Australia has the world’s highest debt levels for individuals, with home mortgages, credit card bills and personal loans comprising 189 per cent of average household incomes.
The Australian economy had also contracted in late 1990, prompting then treasurer Paul Keating (pictured) to memorably declare: ‘This is the recession that Australia had to have’
Back in the June quarter of 1991, when Australia was last in recession, unemployment had climbed to 9.9 per cent, a sharp rise from 5.8 per cent just 18 months earlier
During the late 1980s, household debt levels stood at just 60 per cent of income levels but surging house prices since then have turned Sydney into the world’s third most expensive property market.
Digital Finance Analytics founder Martin North, an economist with more than three decades of experience, said Australia’s high household debt levels could bring about a recession in two years.
‘We have dug ourselves the mother of all problems,’ he told Daily Mail Australia,
‘In 18 months to two years’ time, we could definitely be in recession, we could definitely see home prices 40 per cent down and that, of course, has a significant negative impact on the broader economy.’
Dole queues were common outside Commonwealth Employment Service offices (right) during the early 1990s when EA Ford Falcon taxis (left) were a common sight on Sydney streets
Since peaking in July 2017, Sydney’s median house price has plunged by 13.7 per cent.
Like Mr North, LF Economics founder Lindsay David is tipping a 40 per cent plunge in Sydney and Melbourne house prices, tipping falls of 15 to 20 per cent in 2019 alone.
The ANZ bank is predicting a less severe but nonetheless alarming plummet of 20 per cent in Sydney and Melbourne house prices.
ANZ head of economics David Plank said a housing downturn and an unexpected international financial markets disaster would be enough to tip Australia into the first recession since 1991.
Household debt levels were just 60 per cent of income levels 30 years ago before surging house prices made Sydney (pictured, 1988) the world’s third most expensive property market
‘A recession, yes, it’s always a possibility,’ he told Daily Mail Australia.
‘There’s always a chance that something goes wrong, something you weren’t expecting.
‘The worse case scenario, if we’re hit by a sharp global slowdown at the same time as we’re having this housing adjustment, that combination is potentially quite significant.’
The Reserve Bank of Australia’s February meeting minutes didn’t mention the dread r-word, but it at least acknowledged a decline in house prices will hit consumer spending.