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Speaker 1: Welcome to Fear and Greed the week ahead. I'm Sean Aylmer,

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Speaker 1: and as always at this time and a Monday morning,

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Speaker 1: I'm joined by economist Stephen Caaculis. You'll find him at

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Speaker 1: the Cook dot com, thg kuk dot com and on

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Speaker 1: exit using the handle the Kok Stephen, Good morning, Good morning, Sean.

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Speaker 1: Well quite the week last week. Nothing bigger than those

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Speaker 1: GDP figures.

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Speaker 2: Nothing bigger, nothing smaller. It was one point one percent rise,

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Speaker 2: so thankfully it wasn't zero or negative, because that would

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Speaker 2: have set the hairs running. I'm sure. But even as

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Speaker 2: it stands, and I think this is the common interpretation

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Speaker 2: is that the economy kicked off twenty twenty four because

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Speaker 2: these are the March quarter numbers. Really weak. Zero point

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Speaker 2: one percent quarterly GDP growth is dismal to be frank. Yeah,

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Speaker 2: you know, we in Australia were used to quarterly GDP

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Speaker 2: being around about that point seven point eight. If we're

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Speaker 2: doing that on average, we're doing pretty well, not too hot,

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Speaker 2: not too cold. But we had a point one which fired,

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Speaker 2: a point three, which filed a point two. So you

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Speaker 2: can sort of say that the last three quarters in

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Speaker 2: particular have been really poor and as the media pumped

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Speaker 2: out last week and have been for some time, and

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Speaker 2: rightly so. By the way, if it wasn't for population growth,

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Speaker 2: we'd be going backwards, because that zero point five percent

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Speaker 2: population growth per quarter means that in per capita terms,

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Speaker 2: we've been going backwards for four to four and a

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Speaker 2: half quarters now, which is why people are feeling the pain.

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Speaker 2: I think.

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Speaker 1: Within those GDP figures because it gives so much information

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Speaker 1: around business investment, housing investment, government spending, trade, household Was

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Speaker 1: there anything in particular that you kind of grabbed your

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Speaker 1: attention that surprised you?

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Speaker 2: A couple of little bits and this is of a

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Speaker 2: good news bad news, and in between news, there's a

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Speaker 2: little bit you said, there's something for everybody. The reasonably

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Speaker 2: encouraging news is that we know that business investment is

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Speaker 2: doing okay. I wouldn't say it's strong, but that's one

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Speaker 2: of the things that's keeping a bit of a flaw

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Speaker 2: a bottom line economic growth. That we've got the business

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Speaker 2: sector continuing to buy machinery and equipment and buildings and

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Speaker 2: structures and these sorts of things. Although there was a

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Speaker 2: little bit of a quirk in the quarterly numbers, but

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Speaker 2: Broadly speaking, the business sector is okay. Bad news. Household

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Speaker 2: saving ratio fell to almost zero percent point seven. I

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Speaker 2: think it was for the quarter, which when we used

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Speaker 2: to about plus five percent household saving ratio, which means

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Speaker 2: that every sort of one hundred dollars that the household

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Speaker 2: sector earns in the quarter, we spend ninety five, we

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Speaker 2: put five into savings because of cost of living pressures.

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Speaker 2: That's basically nothing. And the fear is that it actually

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Speaker 2: go to negli, which means people are not only not

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Speaker 2: saving from their income, they're drawing down savings from outside

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Speaker 2: the production process, outside the GDP numbers. And the other thing,

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Speaker 2: which is it sets us up for a bad next quurt.

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Speaker 2: I know I've only just got these March quarter numbers,

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Speaker 2: but point seven, yep, point seven of the growth that

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Speaker 2: occurred in the quarter was due to a run up

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Speaker 2: of inventories. So without that we've been at minus point six.

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Speaker 2: Heaven forbid. But look, there's evidence that some of the

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Speaker 2: mining companies are stockpiling some of their output ready to

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Speaker 2: export or maybe not. And some of the retail inventories

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Speaker 2: are there too, sitting on shelves as retailers are not

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Speaker 2: selling much of their stuff, so we always know that

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Speaker 2: when there's a big inventory move in one quarter, it

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Speaker 2: almost inevitably unwinds the next quarter, which puts a lot

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Speaker 2: of heavy lifting on other parts of the economy for

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Speaker 2: the dun quarter and others which come out in three months.

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Speaker 1: So we better not leave last week without mentioning Michelle

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Speaker 1: Bulletch is in front of Senate Estimates. But Michael Thompson

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Speaker 1: made a very good point during the show last week,

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Speaker 1: and money just highlighting this because I hate to admit

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Speaker 1: that Michael's making good economic points. He said, you know

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Speaker 1: that we have press conferences after the Reserve Bank meetings,

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Speaker 1: cent estimates isn't quite as interesting anymore. And I think

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Speaker 1: he has a point there.

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Speaker 2: There's a point, and I listened to it for my sins.

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Speaker 2: And because the Senate Estimates is made up of politicians,

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Speaker 2: they always have a tendency to try to get a

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Speaker 2: partisan points. So the coalition members were saying, Oh, the

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Speaker 2: budget's going to be adding to inflation, and the labor

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Speaker 2: people saying, oh, no, it's not. So you get a

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Speaker 2: questioning that's sort of more partisan than genuinely digging into

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Speaker 2: what the RBA is thinking. Although having said that. Matt

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Speaker 2: Canavan had a really good question of the governor about

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Speaker 2: how do they forecast the trimmed mean inflation rate given

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Speaker 2: that they don't know what to trim out of the

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Speaker 2: inflation rate Because the trimmed mean inflation rate you can

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Speaker 2: go to the RBA website and look at what's how

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Speaker 2: they calculate that takes out the extreme price moves up

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Speaker 2: and down to get the underlying inflation rate. And of

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Speaker 2: course you only know that after the event. So what

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Speaker 2: are they taking out of the trimmed mean inflation forecasting

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Speaker 2: years time? So really good question. But yeah, Michael's right.

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Speaker 2: You know, the press conferences and the like are a

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Speaker 2: lot more transparent. It's a chance to actually ask the

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Speaker 2: RBA governor, you know, the ins and outs and the

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Speaker 2: intricacies of the forecasts and the outlook for the economy.

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Speaker 2: So that said, all of us economic pointy heads, we're

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Speaker 2: looking at what she said, just in case you let

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Speaker 2: a few slip.

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Speaker 1: Right, what about this week the big number of this

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Speaker 1: week's labor force?

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Speaker 2: Labor force, Yes, that is the that with the inflation

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Speaker 2: rate of the two sort of drivers of what's going

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Speaker 2: to be happening to interest rates. I think that's fairly clear. Look,

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Speaker 2: we had to jump in unemployment rate last month from

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Speaker 2: three point nine to four point one the bit of

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Speaker 2: quirkiness in that monthly volatility, so I think the market's

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Speaker 2: looking for it to be relatively steady at four point

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Speaker 2: one percent. When we get the unemployment rate numbers on Thursday.

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Speaker 2: Employment we know that with this population growth that we

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Speaker 2: need to employ an extra thirty five thousand people a

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Speaker 2: month to keep the unemployment rate steady. So hence there's

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Speaker 2: a forecast for approximately thirty five thousand increase in employment,

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Speaker 2: which is really just matching population growth. Anything weaker than that,

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Speaker 2: and that influence that we saw last week from the

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Speaker 2: soggy GDP numbers, a number of central banks, including the

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Speaker 2: Bank of Canada, cutting interest rates last week might just

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Speaker 2: lead to a bit more dubbishness in our own system

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Speaker 2: if that labor market number is a little bit.

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Speaker 1: Disappointing, Steven and enjoy your week.

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Speaker 2: We'll do, thank you sure.

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Speaker 1: As economist Stephen cookulis better known as the Kook, you

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Speaker 1: can find him at thecook dot com and follow him

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Speaker 1: on x using the handle the Cook. I'm sure, nail man,

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Speaker 1: this is fear and greed. The week Ahead, Dan