As Australia transitions away from the mining boom, it needs the rest of its economy to pick up the slack. That hasn't happened so far, which is why we're seeing some gloomy predictions, writes Greg Jericho.

Today the latest GDP figures will be released. The expectation is for them to be less than stellar, but at least positive. However, due to some poor recent economic data, the word "recession" has begun to get thrown around.

After such a long time without a recession, no treasurer would wish to be the one to preside over such an event. For Joe Hockey, the path away from recession lies with his hope that the budget measures for small businesses will enliven investment in the non-mining sector. And given the current poor state of investment in that sector, his measures will need to work.

Economists love to call recessions. The standard joke about economists and recessions is the one made by Paul Samuelson that some economists have predicted nine out of the last five recessions. And there is certainly a great allure to being the one who predicts the bad times to come.

Australia has not had a recession since June 1991, which was the last time there were two consecutive quarters of negative GDP growth in seasonally adjusted terms.

Of course, such a definition is utterly stupid, and really should be thrown out as soon as possible. Any definition where an economy could shrink by 0.5 per cent in one quarter, rise by 0.1 per cent in the next, and then shrink by 0.6 per cent the quarter after and not be in a recession is complete lunacy.

There is for example no particular reason why we shouldn't apply the definition to GDP per capita instead of total GDP. But even that has flaws.

During the GFC, Australia's GDP per capita fell 0.2 per cent in the June 2008 quarter, then rose by 0.1 per cent in the September 2008 quarter, before falling by 1.3 per cent in the December quarter.

But apparently we weren't in a recession.

In the 12 months from June 2008 to June 2009, the unemployment rate rose by 1.6 percentage points. But no, we weren't in a recession.

Our economic debate would be much improved were we to acknowledge that far from going through the GFC without a scratch, we received a rather big scar.

But this is all history; what of the future? Last week when the latest capital expenditure data was released, it was accompanied with talk of recession.

The scary thing is the talk is not unwarranted.

Capital expenditure looks at the amount invested by companies on buildings and structures (roads, mines etc) and on machinery, plants and equipment. More investment invariably leads to more jobs, more economic activity elsewhere and generally more tax.

But the current capital expenditure picture is not good. That in itself is not a concern, for the picture hasn't been good for a while now.

Since the peak in June 2012, total new private capital expenditure has fallen nearly 12 per cent.

This is pretty much all due to the end of the investment side of the mining boom. We all knew it was coming, and perhaps it has come faster than we would have liked, but that in itself is not the concern from last week's figures.

The concern is that the non-mining side of the economy is not picking up the slack to the extent that might assist the transition from the mining boom.

The data showed that in the last quarter, capital expenditure in "other selected industries" - which pretty much includes everything not mining or manufacturing - fell 4.2 per cent in seasonally adjusted terms:

At the start of the year, the RBA was noting that growth of non-mining investment was expected to be "subdued", but at least there was the anticipation of it growing.

And what is worse is the outlook for the next 12 months.

Last week's figures contained the second set of estimates for investment in the year ahead. And it is not all that optimistic.

The estimate for investment in new machinery, plant and equipment in 2015-16 in "Other selected industries" is the lowest since the estimate for 2005-06:

That represents a 13 per cent decline from the second estimate made 12 months ago - the biggest fall since 1992.

Fortunately, estimates are just that. The end result is always much higher. Since 1989, the final investment on machinery, plant and equipment in the "Other selected industries" averages about 50 per cent higher than was estimated in the second estimate:

And we should hope that the final result does not see as great a fall as is currently expected. The May Budget forecast that mining investment would fall 25.5 per cent in the coming financial year. The second estimate for mining investment however projects a fall of 35 per cent.

Similarly, the budget predicted non-mining investment in 2015-16 would rise 4 per cent. But the combined second estimate for investment in all non-mining sectors (including manufacturing) is 10.4 per cent lower than 12 months ago. To get to the budgeted growth of 4 per cent would require the biggest improvement in actual investment over what was predicted in the second estimate since 2004-05:

And here Joe Hockey would have some cause for optimism. The major economic measure in the budget - the instant asset write-off of up to $20,000 for small businesses - is aimed squarely at the machinery, plant and equipment investment in the non-mining sector.

The Treasury secretary John Fraser might have told the Senate Estimates Economics committee that the intent of the policy was not "primarily... a macroeconomic restoration measure" but that rather it was "about building up the small business sector". But the only reason the Government is desperate to build up that sector is because it needs to get the non-mining sector going if it wants to keep the economy growing.

And while the estimates contained in last week's figures would not give one much hope, the reality is they would not have fully taken into account these measures in the budget.

For the impact, we will have to wait another three months to see what arises in "Estimate 3". If that shows a similarly bleak outlook, then it will be well and truly time to smash the glass and ring the warning bell.

It's rare that a budget measure designed to improve economic growth will be so easy to judge so quickly.

But the capital expenditure figures also show another cause for concern. Thus far the decline in the mining sector has been predominantly in Queensland.

In the past two years, capital expenditure in Queensland has fallen 30 per cent, whereas in WA it is down just 2 per cent.

Capital expenditure in WA however is 1.7 times the amount of that in Queensland, and it accounts for around 38 per cent of all private investment in Australia.

If (or perhaps when) WA's mining sector follows the lead of Queensland, it will take an almighty amount of investment in the other states to make up for it. It is an amount that will need more than just some tradies buying a $19,000 ute.

And if non-mining investment does not pick up the slack, it is very likely that we won't have to worry about whether the definition of recession fits the dire state our economy will be in.

Greg Jericho writes weekly for The Drum. He tweets at @grogsgamut.