Australians bought EVs instead of flying to Europe — what the June national accounts reveal

# What the numbers say Australia's national accounts for the June quarter show growth, but not the kind that lifts living standards. Real GDP rose 0.4% in the three months to June, bringing annual growth to 2.1% — softer than the 2.5% recorded a year earlier. The ABS and the treasury framed this as a reasonable result given "challenging international circumstances."

# Growth is happening, but it's population-driven The overall expansion in GDP mainly reflects a larger population, not stronger output per person. Real GDP per person fell by 0.1% in the quarter and was only 0.7% higher over the year, still below its 2022 peak. Labor productivity measures, like real GDP per hour worked, offered no improvement. That means average living standards, as experienced by households, are effectively stagnant.

# Households: slightly better off, but cautious After adjusting for inflation, household disposable income rose 0.6% in the quarter (0.3% after population). The household saving rate ticked up to 6.5%, roughly the 20-year average, suggesting many households are rebuilding buffers rather than stepping up discretionary spending. Economists noted this partial pass-through of rate rises: interest rate hikes have had only limited impact on incomes so far.

# Where the spending went: cars, not Europe

Spending redirected to vehicles. Record sales of electric and hybrid cars accounted for roughly three-quarters of the quarter's 0.4% consumption growth. Vehicle purchases rose about 10% in three months. Policy incentives and the desire to avoid rising petrol bills appear to have accelerated the switch toward fuel-efficient and electric models. Absent that auto spending, consumption would have been far weaker.

# Inflation, productivity and global volatility remain problems Treasury and commentators singled out three structural challenges in the numbers: inflation, weak productivity, and external volatility. Inflation is still elevated, and productivity measures remain lacklustre. Global shocks — notably the conflict that pushed oil prices higher — are squeezing costs and altering spending choices.

# What analysts expect next Economists expect growth to slow further through 2026 as higher interest rates and the cost of living weigh on activity. Forecasts cited in coverage point toward growth converging toward roughly 1.3–1.5% by year end unless productivity or spending surprises to the upside.

# Practical implications for readers If you follow the implications for household budgets, the takeaway is mixed. Incomes are modestly higher in real terms for now, and saving is steady, but spending power per person is weak and housing and borrowing costs remain a risk. For consumers, the shift into electric vehicles is already affecting major purchases and household transport costs. For policy watchers, the figures underline the need to address productivity if living standards are to recover over the medium term.

# Bottom line The national accounts show a functioning economy that's growing but not delivering clear gains in living standards. The headline GDP rise masks weak per-person output and a reliance on one-off consumption patterns — notably a surge in EV and hybrid purchases — to prop up spending while travel declines.