There aren't many statistics that can point to whether a recession is coming or not.
Often statistics don't actually mean anything, particularly for share market returns. However, some stats can be lead indicators for what's coming next.
We recently learned that Australia might be in a per-capita recession, which is why each Australian household is finding it so tough at the moment. Inflation and wages growth are making things difficult, although the total GDP of Australia is still growing.
According to the Australian Bureau of Statistics (ABS), household lending dropped by 2.4% in January 2019.
Credit growth is a key statistic that drives the economy, led by Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).
Every dollar that is spent in the economy usually goes round and round to other businesses and individuals. A fall in lending potentially signals a fall in spending and economic activity, which could mean a drop in GDP.
Nick Scali Limited (ASX: NCK), JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) are just some of the consumer-facing ASX businesses to report that their stores are showing a slowdown of same store sales.
Of course, a single month of declines of household lending doesn't necessarily mean anything. February could show growth.
Lending to businesses jumped 10.8%, which is a good sign that the major banks of relaxed their rules a little bit. The ANZ CEO in-particular said that his bank had perhaps been a bit too stringent.
Foolish takeaway
Maybe it won't be bad at all, perhaps there won't be an official recession. Australia has a lucky track record of different areas of the economy picking up the slack. Resources has been a previous saviour for Australia and infrastructure construction could boost things over the next few years.
