1 00:00:05,920 --> 00:00:09,039 Speaker 1: Welcome to Fearing Greed QNA, where we ask and answer 2 00:00:09,119 --> 00:00:13,200 Speaker 1: questions about business, investing, economics, politics and more. I'm Sean 3 00:00:13,240 --> 00:00:15,960 Speaker 1: Alma and every Monday morning we asked the question what's 4 00:00:16,000 --> 00:00:19,040 Speaker 1: happening in the week ahead when it comes to the economy. 5 00:00:19,079 --> 00:00:21,840 Speaker 1: I'm joined by economist Stephen Coaculis. You'll find him at 6 00:00:21,840 --> 00:00:24,000 Speaker 1: the cook dot com and on X using the handle 7 00:00:24,040 --> 00:00:26,920 Speaker 1: the Cook that's t h E K O U K Stephen. 8 00:00:26,960 --> 00:00:28,920 Speaker 2: Good morning, top of the morning to you, Sean. 9 00:00:29,880 --> 00:00:32,040 Speaker 1: Hell of a week last week, Steven. Let's be honest. 10 00:00:32,040 --> 00:00:34,920 Speaker 1: We had we had speeches, we had inflation data, we 11 00:00:34,960 --> 00:00:37,280 Speaker 1: had retail building, all sorts of things. 12 00:00:37,880 --> 00:00:40,080 Speaker 2: Where to start. I think the obvious ones, that is 13 00:00:40,120 --> 00:00:44,440 Speaker 2: the inflation numbers, and I think everybody let out a 14 00:00:44,479 --> 00:00:48,640 Speaker 2: big sigh of relief because they confirmed headline inflation at 15 00:00:48,680 --> 00:00:51,120 Speaker 2: two point one percent. And yes, they are being distorted 16 00:00:51,120 --> 00:00:53,479 Speaker 2: by a whole lot of government policies. But if we 17 00:00:53,479 --> 00:00:55,600 Speaker 2: look at the trimmed mean, which is what the RBA 18 00:00:55,960 --> 00:00:59,680 Speaker 2: love to look at, it decelerated further to two point 19 00:00:59,800 --> 00:01:02,600 Speaker 2: six seven percent, so in the target band, and it 20 00:01:02,720 --> 00:01:06,360 Speaker 2: was in the range that the Reserve Bank have indicated 21 00:01:06,400 --> 00:01:12,319 Speaker 2: that their shock non cut decision last month was needed 22 00:01:12,319 --> 00:01:13,840 Speaker 2: to sort of put them across the line. So the 23 00:01:13,840 --> 00:01:16,720 Speaker 2: market as we sit here now is pricing in well baseball, 24 00:01:16,800 --> 00:01:19,200 Speaker 2: it's actually more than one hundred percent chance for rate 25 00:01:19,280 --> 00:01:22,760 Speaker 2: cut on the twelfth of aug. So inflation is decelerating. 26 00:01:23,040 --> 00:01:24,520 Speaker 2: And I guess when you stop and think about it, 27 00:01:24,520 --> 00:01:26,959 Speaker 2: when the economy has been pretty sluggish, which it has 28 00:01:27,040 --> 00:01:29,399 Speaker 2: been for the best part of eight eight months or so, 29 00:01:29,480 --> 00:01:33,640 Speaker 2: that consumers have been relatively weak, and exports have been 30 00:01:33,680 --> 00:01:35,640 Speaker 2: pretty weak, that sort of stuff, it's not surprising, and 31 00:01:35,680 --> 00:01:41,920 Speaker 2: inflations falling, it has filter in rate cut fantastic. 32 00:01:42,280 --> 00:01:46,080 Speaker 1: Having said all that, because you dismal scientists, you economists, 33 00:01:46,120 --> 00:01:49,080 Speaker 1: there's always the other side of the coin. And there's 34 00:01:49,080 --> 00:01:51,960 Speaker 1: actually some data out last week on retail and building. 35 00:01:52,160 --> 00:01:54,600 Speaker 1: Neither of those sectors have been doing particularly well except 36 00:01:54,960 --> 00:01:56,040 Speaker 1: the data from last week. 37 00:01:56,160 --> 00:01:59,000 Speaker 2: Except that, well, the journ retail sales numbers, and this 38 00:01:59,040 --> 00:02:02,080 Speaker 2: is the last retail released ever from the Bureau of Statistics. 39 00:02:02,120 --> 00:02:05,840 Speaker 2: They've moved household survey which is actually coming out this week, 40 00:02:05,920 --> 00:02:09,520 Speaker 2: so a more comprehensive survey of consumer spending. But that said, 41 00:02:09,760 --> 00:02:13,080 Speaker 2: the retail sales plus one point two percent month on 42 00:02:13,160 --> 00:02:16,400 Speaker 2: month in June. Now that follows, admittedly a couple of 43 00:02:16,400 --> 00:02:18,880 Speaker 2: sluggish months, but there was a bit of a spike 44 00:02:19,000 --> 00:02:22,720 Speaker 2: in how much we consumers were actually spending in the 45 00:02:22,720 --> 00:02:26,399 Speaker 2: retail sector in June. However, again gosh, on the one hand, 46 00:02:26,440 --> 00:02:30,399 Speaker 2: On the other hand, here I am again the June 47 00:02:30,480 --> 00:02:34,960 Speaker 2: numbers incorporated the June quarter, so the April, May and 48 00:02:35,200 --> 00:02:38,080 Speaker 2: June data in real volume terms, and they were actually 49 00:02:38,120 --> 00:02:40,960 Speaker 2: a little bit weak the eros byero point three percent 50 00:02:41,520 --> 00:02:44,440 Speaker 2: in the quarter. And in per capita terms, which sort 51 00:02:44,440 --> 00:02:46,480 Speaker 2: of matters for standards of living and all that stuff. 52 00:02:46,480 --> 00:02:49,079 Speaker 2: I'd a lot about per capita recessions and per capita 53 00:02:49,160 --> 00:02:52,360 Speaker 2: GDP they're like, but per capita real retail sales minus 54 00:02:52,400 --> 00:02:55,560 Speaker 2: point one percent in the court, So on average we 55 00:02:55,639 --> 00:02:58,280 Speaker 2: are all spending a smidge less, and it's really population 56 00:02:58,440 --> 00:03:03,040 Speaker 2: growth that spark the increase in retail spinning. Building approvals hooray. 57 00:03:03,120 --> 00:03:05,880 Speaker 2: I actually danced when I saw a plus twelve percent. 58 00:03:06,919 --> 00:03:09,920 Speaker 1: I would I would love to see the dancing. 59 00:03:10,120 --> 00:03:16,120 Speaker 2: Oh mate, you get it onst that goes with my 60 00:03:16,240 --> 00:03:19,480 Speaker 2: karaoke singing. It doesn't get a lot of public display. 61 00:03:19,600 --> 00:03:23,840 Speaker 2: But building approvals rose twelve percent, highest level in almost 62 00:03:23,840 --> 00:03:27,760 Speaker 2: four years, moving to an annualized rate above two hundred 63 00:03:27,800 --> 00:03:31,760 Speaker 2: thousand dwellings for the first time in almost four years. 64 00:03:32,160 --> 00:03:34,640 Speaker 2: And while we're still short of the run rate, we 65 00:03:34,720 --> 00:03:36,760 Speaker 2: need to get to that one point two million new 66 00:03:36,840 --> 00:03:40,760 Speaker 2: dwellings over five years to meet the supply constraints that 67 00:03:40,760 --> 00:03:43,360 Speaker 2: are front confront of the housing market. Right now, we 68 00:03:43,480 --> 00:03:48,080 Speaker 2: actually are getting some sort of recovery, so property developers, 69 00:03:48,160 --> 00:03:50,400 Speaker 2: builders are sort of getting out there and you know 70 00:03:50,480 --> 00:03:53,480 Speaker 2: that trend improvement in the supply of response to housing 71 00:03:54,120 --> 00:03:56,320 Speaker 2: just might be coming through. And that's that's what makes 72 00:03:56,320 --> 00:03:58,760 Speaker 2: me happy, because we need to build more dwellings if 73 00:03:58,800 --> 00:04:00,720 Speaker 2: we're to fix this housing affordability issue. 74 00:04:00,880 --> 00:04:04,640 Speaker 1: Why do we get so hung up on building approvals 75 00:04:04,680 --> 00:04:08,000 Speaker 1: and building Why is construction so important to the Australian economy. 76 00:04:08,280 --> 00:04:11,200 Speaker 2: Well, it's actually first, it's also an important part of GDP. 77 00:04:11,440 --> 00:04:15,560 Speaker 2: So when you think about the digging foundations, pouring cement 78 00:04:15,680 --> 00:04:18,159 Speaker 2: and hammering up the jip brock and the frames and 79 00:04:18,160 --> 00:04:20,800 Speaker 2: all this other stuff. It employs a lot of people 80 00:04:21,440 --> 00:04:25,600 Speaker 2: construction sectors about five directly five percent of employment. When 81 00:04:25,640 --> 00:04:28,040 Speaker 2: you think about the secondary effects, because each dwelling has 82 00:04:28,080 --> 00:04:31,320 Speaker 2: to be fitted with a washing machine and heaters and 83 00:04:31,360 --> 00:04:33,680 Speaker 2: air conditions and all those sorts of things. The effect 84 00:04:33,680 --> 00:04:36,400 Speaker 2: on retail spending is actually positive, so there's a compounding 85 00:04:36,440 --> 00:04:39,440 Speaker 2: effect through that. So that's what matters. And again, given 86 00:04:39,440 --> 00:04:43,560 Speaker 2: that our Australian obsession with housing and legitimately this question 87 00:04:43,600 --> 00:04:45,760 Speaker 2: of housing affordability that it's been around for a long 88 00:04:45,800 --> 00:04:49,320 Speaker 2: time being at renting or prices, and we've had a 89 00:04:49,400 --> 00:04:53,080 Speaker 2: very high level of immigration post COVID, that we do 90 00:04:53,200 --> 00:04:57,000 Speaker 2: need to focus on building more houses to supply those 91 00:04:57,080 --> 00:05:00,360 Speaker 2: dwellings and Sean economics one on one. I know you 92 00:05:00,440 --> 00:05:02,920 Speaker 2: know this really really well, and I know every one 93 00:05:03,000 --> 00:05:06,080 Speaker 2: listening knows as well. Supply and demand do work. If 94 00:05:06,120 --> 00:05:09,679 Speaker 2: you've got an extra supply relative to demand, the price falls, 95 00:05:09,800 --> 00:05:11,560 Speaker 2: and that's what we need in housing. You need to 96 00:05:11,600 --> 00:05:12,480 Speaker 2: build more dwellings. 97 00:05:12,600 --> 00:05:16,559 Speaker 1: Okay, what about this week? You mentioned the household spending survey. 98 00:05:16,640 --> 00:05:17,599 Speaker 1: Excited about that one. 99 00:05:17,720 --> 00:05:19,320 Speaker 2: I'm very excited because it's been coming up for a 100 00:05:19,320 --> 00:05:21,359 Speaker 2: few months now, so there's been sort of this overlap 101 00:05:21,440 --> 00:05:24,640 Speaker 2: of retail sales and household spending. The household spending survey 102 00:05:24,680 --> 00:05:27,839 Speaker 2: incorporates a lot of spending on services that were not 103 00:05:28,160 --> 00:05:31,679 Speaker 2: in the retail sales and so it's about double the size. 104 00:05:31,680 --> 00:05:34,440 Speaker 2: So it's a really good indicator of how we consumers 105 00:05:34,440 --> 00:05:36,719 Speaker 2: are responding. And given what we saw last week on 106 00:05:36,800 --> 00:05:39,440 Speaker 2: the retail sales which feed into it, of course we're 107 00:05:39,440 --> 00:05:41,920 Speaker 2: probably going to get another decent result on household spending. 108 00:05:41,960 --> 00:05:45,480 Speaker 2: So that's something that again RBA Deputy Governor Andrew Houserd 109 00:05:45,560 --> 00:05:47,919 Speaker 2: was talking about last week. The consumer side of the 110 00:05:47,960 --> 00:05:52,240 Speaker 2: economy is something that they've got in their forecasting outlook 111 00:05:52,400 --> 00:05:55,520 Speaker 2: as something that is behind an economic recovery. We want 112 00:05:55,560 --> 00:05:58,400 Speaker 2: to see a pretty solid number coming through on household 113 00:05:58,440 --> 00:06:01,120 Speaker 2: spending because that is still half of the GDP. So 114 00:06:01,400 --> 00:06:05,120 Speaker 2: looking for another decent sort of increase to sort of 115 00:06:05,160 --> 00:06:07,440 Speaker 2: put a bit more optimism into the economy. Anything else 116 00:06:07,480 --> 00:06:11,400 Speaker 2: this week, International trade, I'll just spend thirty seconds on that. 117 00:06:11,440 --> 00:06:14,000 Speaker 2: Cause's quite interesting, did you know. And I was looking 118 00:06:14,000 --> 00:06:15,919 Speaker 2: at this to think, well, why is this d economy 119 00:06:15,960 --> 00:06:19,400 Speaker 2: still not getting that traction that we wanted to the 120 00:06:19,560 --> 00:06:23,440 Speaker 2: value of exports has fallen fifteen percent in the last 121 00:06:23,440 --> 00:06:25,560 Speaker 2: two years, and I was sort of looking at the 122 00:06:25,640 --> 00:06:28,680 Speaker 2: volumes are actually holding up. Okay, so the tonnages of 123 00:06:28,800 --> 00:06:32,120 Speaker 2: stuff that the big exporters are selling to China and 124 00:06:32,160 --> 00:06:34,279 Speaker 2: resources and these sorts of things are okay, but the 125 00:06:34,360 --> 00:06:38,000 Speaker 2: price has fallen. So instead of getting over fifty billion 126 00:06:38,960 --> 00:06:42,400 Speaker 2: per month in export receipts for cash, it's now to 127 00:06:42,520 --> 00:06:45,080 Speaker 2: about forty two to forty three billions so per month. 128 00:06:45,279 --> 00:06:47,640 Speaker 2: And that's what hol on bottom line national income. And 129 00:06:47,680 --> 00:06:50,279 Speaker 2: that's sort of why perhaps the economy is a little 130 00:06:50,279 --> 00:06:51,760 Speaker 2: bit weaker than we thought. So I'm going to look 131 00:06:51,760 --> 00:06:54,080 Speaker 2: at these trade numbers to see where there's any rebound 132 00:06:54,160 --> 00:06:54,680 Speaker 2: in exports. 133 00:06:54,800 --> 00:06:56,800 Speaker 1: So real last week, I think for its half year, 134 00:06:56,880 --> 00:06:59,640 Speaker 1: it dropped its dividend purely on the back of lower 135 00:06:59,640 --> 00:07:02,200 Speaker 1: iron oil prices. And this is exactly what you're talking about. 136 00:07:02,200 --> 00:07:03,480 Speaker 1: This is how it feeds through. 137 00:07:03,680 --> 00:07:06,320 Speaker 2: Correct and so you're seeing that come through not not 138 00:07:06,360 --> 00:07:08,760 Speaker 2: only the corporate world, but in the national income sense, 139 00:07:08,760 --> 00:07:11,320 Speaker 2: because that's export dollars at the Australian economy is not 140 00:07:11,360 --> 00:07:11,920 Speaker 2: only So all. 141 00:07:11,880 --> 00:07:12,960 Speaker 1: Of a sudden, we're going to have to look at 142 00:07:12,960 --> 00:07:14,600 Speaker 1: the ABS's international trade data. 143 00:07:15,240 --> 00:07:16,520 Speaker 2: I'm going to be looking at it a bit more 144 00:07:16,560 --> 00:07:18,640 Speaker 2: than I used to because I still glances and think, oh, 145 00:07:18,640 --> 00:07:21,679 Speaker 2: there's a surplace of five billion dollars a good exports imports. 146 00:07:21,840 --> 00:07:24,800 Speaker 2: We're doing okay on the international trade front. But just again, 147 00:07:25,080 --> 00:07:26,800 Speaker 2: anybody have a look at the chart, go to the 148 00:07:26,880 --> 00:07:29,520 Speaker 2: RBA chart pack. There's a child on exports and you're 149 00:07:29,520 --> 00:07:31,520 Speaker 2: sort of looking think, see that's actually pretty weak, and 150 00:07:31,640 --> 00:07:35,240 Speaker 2: remembering that exports are about one fifth bottom line GDP. 151 00:07:35,400 --> 00:07:37,160 Speaker 2: So if that's weak, you've got to get the other 152 00:07:37,200 --> 00:07:39,840 Speaker 2: parts really kicking high to get a decent level of 153 00:07:39,880 --> 00:07:40,600 Speaker 2: economic growth. 154 00:07:40,720 --> 00:07:41,680 Speaker 1: Kirk, enjoy your week. 155 00:07:41,920 --> 00:07:42,320 Speaker 2: Thank you. 156 00:07:42,680 --> 00:07:44,560 Speaker 1: That was kind of a Stephen coculis better known as 157 00:07:44,560 --> 00:07:46,160 Speaker 1: the Kookie. You can find him at the cook dot 158 00:07:46,200 --> 00:07:48,800 Speaker 1: com and follow him on next using to handle the Kirk, 159 00:07:49,120 --> 00:07:51,920 Speaker 1: I'm sure all and this is hearing greed, Q and D.