1 00:00:08,369 --> 00:00:10,819 Sean Aylmer: Welcome to Fear and Greed, The Week Ahead. This is where 2 00:00:10,820 --> 00:00:13,389 Sean Aylmer: we take a look at the big events, reports and releases coming up 3 00:00:13,390 --> 00:00:15,940 Sean Aylmer: this week that give insight into the economy. And look 4 00:00:15,940 --> 00:00:18,360 Sean Aylmer: back at what happened last week, too. I'm Sean Aylmer 5 00:00:18,360 --> 00:00:20,190 Sean Aylmer: and every Monday I'm joined for the week ahead by 6 00:00:20,190 --> 00:00:26,220 Sean Aylmer: economist Stephen Koukoulas. You'll find him at thekouk.com, T-H-E-K-O-U-K, thekouk.com and 7 00:00:26,220 --> 00:00:29,540 Sean Aylmer: on Twitter using the handle, @TheKouk. Stephen, good morning. 8 00:00:30,080 --> 00:00:31,110 Stephen Koukoulas: And good morning, Sean. 9 00:00:31,350 --> 00:00:32,669 Sean Aylmer: Plenty going on last week. 10 00:00:33,080 --> 00:00:35,690 Stephen Koukoulas: It was a bumper week. Look, where do we start? Look, 11 00:00:35,860 --> 00:00:38,479 Stephen Koukoulas: the highlight was probably the labour force numbers. They are 12 00:00:38,479 --> 00:00:41,970 Stephen Koukoulas: the ones that did incorporate a lot of the lockdowns 13 00:00:42,010 --> 00:00:43,830 Stephen Koukoulas: that were in, certainly New South Wales, and to a 14 00:00:44,060 --> 00:00:46,860 Stephen Koukoulas: slightly lesser extent, Victoria. Remembering that they went into their 15 00:00:47,270 --> 00:00:49,860 Stephen Koukoulas: current lockdown down phase, I can't remember what we're up to now, 16 00:00:49,860 --> 00:00:53,470 Stephen Koukoulas: what number, a little bit later. But it did show, amazingly, 17 00:00:53,470 --> 00:00:55,670 Stephen Koukoulas: a drop in the unemployment rate to four and a 18 00:00:55,670 --> 00:00:59,630 Stephen Koukoulas: half per cent. But, and this is an enormous but, the numbers 19 00:00:59,630 --> 00:01:02,930 Stephen Koukoulas: did also show that there are close to 300, 000 people 20 00:01:02,930 --> 00:01:07,270 Stephen Koukoulas: who are still counted as employed, but are working zero hours. 21 00:01:07,680 --> 00:01:10,160 Stephen Koukoulas: So it's this thing that we learnt from the phase 22 00:01:10,160 --> 00:01:13,530 Stephen Koukoulas: one lockdowns in 2020, that people, and a lot of businesses, 23 00:01:13,940 --> 00:01:16,200 Stephen Koukoulas: are not sacking their workers, which of course is a 24 00:01:16,200 --> 00:01:18,679 Stephen Koukoulas: good thing, but they're not working any hours because the 25 00:01:18,680 --> 00:01:21,929 Stephen Koukoulas: hospitality sector, and a lot of other areas of the economy, 26 00:01:21,930 --> 00:01:25,209 Stephen Koukoulas: are actually shut. So, in the olden days, perhaps they 27 00:01:25,209 --> 00:01:28,350 Stephen Koukoulas: would have gone straight onto the unemployment queues. In this 28 00:01:28,350 --> 00:01:31,209 Stephen Koukoulas: current cycle, and the way things are being defined by 29 00:01:31,209 --> 00:01:34,300 Stephen Koukoulas: the bureau of statistics, they're just being counted as employed still, 30 00:01:34,530 --> 00:01:39,309 Stephen Koukoulas: but working zero hours. So, if we look through the 31 00:01:39,310 --> 00:01:43,870 Stephen Koukoulas: fall in the participation rate, this move to zero hours employment, 32 00:01:43,870 --> 00:01:47,340 Stephen Koukoulas: if you like, other people have estimated the true unemployment 33 00:01:47,340 --> 00:01:50,440 Stephen Koukoulas: rates currently are around about nine and a half to 10%. 34 00:01:50,740 --> 00:01:51,010 Sean Aylmer: Wow. 35 00:01:51,180 --> 00:01:53,170 Stephen Koukoulas: We have had a hit to the unemployment rate, but 36 00:01:53,170 --> 00:01:55,420 Stephen Koukoulas: it's just not showing up in these official numbers, so 37 00:01:56,040 --> 00:01:58,500 Stephen Koukoulas: that's the spike that we're seeing. And the question is, 38 00:01:58,500 --> 00:02:02,210 Stephen Koukoulas: well, how quickly will we get those people working hours 39 00:02:02,350 --> 00:02:05,470 Stephen Koukoulas: when the lockdowns end, hopefully, hopefully in a month or two. 40 00:02:05,690 --> 00:02:09,230 Sean Aylmer: Almost 150,000 jobs lost in August, presumably you're going to 41 00:02:09,230 --> 00:02:10,520 Sean Aylmer: get something the same this month? 42 00:02:10,970 --> 00:02:15,010 Stephen Koukoulas: Yes. So, I overlooked the fact that we just did lose 145, 000 43 00:02:15,010 --> 00:02:18,480 Stephen Koukoulas: jobs or so, and again, mostly concentrated in New South Wales, 44 00:02:18,480 --> 00:02:20,860 Stephen Koukoulas: no surprise there. So next month, when we get the 45 00:02:20,860 --> 00:02:25,120 Stephen Koukoulas: September data, we will have, inevitably, a big fall in Victoria, 46 00:02:25,130 --> 00:02:28,050 Stephen Koukoulas: a big fall in the ACT, and probably even further 47 00:02:28,050 --> 00:02:31,030 Stephen Koukoulas: falls in New South Wales. So we're really, and this 48 00:02:31,030 --> 00:02:33,530 Stephen Koukoulas: is what the Reserve Bank have been saying too, that 49 00:02:33,530 --> 00:02:37,590 Stephen Koukoulas: we're really looking at this current lockdown phase and its 50 00:02:37,590 --> 00:02:39,660 Stephen Koukoulas: impact on the economy as an air pocket, not a 51 00:02:39,660 --> 00:02:43,570 Stephen Koukoulas: change in trend. And that when we get that 80, 85% 52 00:02:43,570 --> 00:02:46,889 Stephen Koukoulas: double vaccination rate, hopefully, towards the end of this year, 53 00:02:46,889 --> 00:02:49,370 Stephen Koukoulas: things open up, that we'll get the labour market recovering. 54 00:02:49,440 --> 00:02:50,910 Stephen Koukoulas: A little bit like we did in the latter part 55 00:02:50,910 --> 00:02:51,590 Stephen Koukoulas: of 2020. 56 00:02:51,850 --> 00:02:53,730 Sean Aylmer: And the Reserve Bank Governor, Philip Lowe, was speaking last 57 00:02:53,730 --> 00:02:54,310 Sean Aylmer: week, as well. 58 00:02:54,669 --> 00:02:58,660 Stephen Koukoulas: Yes. And as I just alluded to, he's realistic about 59 00:02:59,190 --> 00:03:02,550 Stephen Koukoulas: what's clearly happening in the economy in this current downturn. 60 00:03:02,560 --> 00:03:07,250 Stephen Koukoulas: GDP -3% for the September quarter, as we've just touched on, 61 00:03:07,250 --> 00:03:10,810 Stephen Koukoulas: the labour market weakening because of that. But he's saying 62 00:03:10,810 --> 00:03:13,130 Stephen Koukoulas: that he's still optimistic that once we get through this, 63 00:03:13,130 --> 00:03:15,470 Stephen Koukoulas: and the vaccination rates pick up, that we're going to 64 00:03:15,470 --> 00:03:20,540 Stephen Koukoulas: see consumers, in particular, driving the recovery. They're cashed up, 65 00:03:20,540 --> 00:03:23,280 Stephen Koukoulas: they've got the wealth effect from high house prices and 66 00:03:23,280 --> 00:03:25,889 Stephen Koukoulas: high stock prices, both of which have done very well 67 00:03:25,889 --> 00:03:28,549 Stephen Koukoulas: in recent times. He also said to mention things about 68 00:03:28,550 --> 00:03:31,050 Stephen Koukoulas: house prices, again, for those who think that the RBA 69 00:03:31,050 --> 00:03:34,870 Stephen Koukoulas: should be hiking to dampen this housing price boom. He said, look, 70 00:03:35,110 --> 00:03:37,570 Stephen Koukoulas: they don't control house prices. It's not in their mandate. 71 00:03:37,570 --> 00:03:40,100 Stephen Koukoulas: And even if it was anyway, hiking interest rates to 72 00:03:40,100 --> 00:03:44,060 Stephen Koukoulas: target rising house prices would have unfortunate consequences for business, 73 00:03:44,060 --> 00:03:46,850 Stephen Koukoulas: investment and employment. So in a sense, you'd be... Sure 74 00:03:46,850 --> 00:03:48,880 Stephen Koukoulas: you'd fix house prices with a series of rate hikes, 75 00:03:48,880 --> 00:03:51,330 Stephen Koukoulas: but you'd actually go cruel the economy. And he doesn't 76 00:03:51,330 --> 00:03:52,520 Stephen Koukoulas: want to do that. And he won't do that. 77 00:03:52,720 --> 00:03:54,530 Sean Aylmer: Now, one thing I thought last week which was interesting, 78 00:03:54,530 --> 00:03:58,910 Sean Aylmer: is both business and consumers seem reasonably upbeat, all things given. 79 00:03:59,580 --> 00:04:02,870 Stephen Koukoulas: Yes, the NAB survey, Westpac survey, of consumer sentiment were 80 00:04:02,870 --> 00:04:07,290 Stephen Koukoulas: both pretty good, certainly way stronger than they were this 81 00:04:07,290 --> 00:04:09,480 Stephen Koukoulas: time last year when the first round of lockdowns were 82 00:04:09,480 --> 00:04:12,920 Stephen Koukoulas: occurring. So I think businesses and consumers are looking through 83 00:04:12,930 --> 00:04:16,610 Stephen Koukoulas: this period, and it's more of an emotive thing these 84 00:04:16,610 --> 00:04:20,300 Stephen Koukoulas: lockdowns, for those who aren't directly impacted by their businesses 85 00:04:20,300 --> 00:04:22,510 Stephen Koukoulas: and their work being hit. So we've learned that there 86 00:04:22,510 --> 00:04:24,219 Stephen Koukoulas: is light at the end of the tunnel. And I 87 00:04:24,220 --> 00:04:27,029 Stephen Koukoulas: think people are looking at these vaccination rates really picking 88 00:04:27,029 --> 00:04:28,810 Stephen Koukoulas: up in the last few weeks and saying, well, hang 89 00:04:28,810 --> 00:04:31,460 Stephen Koukoulas: on, we could be going more or less about our 90 00:04:31,460 --> 00:04:34,870 Stephen Koukoulas: business end of October- ish, middle to end of October, 91 00:04:34,870 --> 00:04:37,790 Stephen Koukoulas: November. And so, that these wonderful summer holidays that are 92 00:04:37,790 --> 00:04:41,900 Stephen Koukoulas: coming along, we could be zipping around Australia, visiting family 93 00:04:41,900 --> 00:04:44,369 Stephen Koukoulas: and friends interstate, and doing those sorts of things. So 94 00:04:44,370 --> 00:04:46,529 Stephen Koukoulas: I think that optimism is showing up in both businesses 95 00:04:46,529 --> 00:04:47,190 Stephen Koukoulas: and consumers optimism. 96 00:04:47,190 --> 00:04:50,970 Sean Aylmer: And just quickly, population figures came out late last week, as well. 97 00:04:51,220 --> 00:04:55,190 Stephen Koukoulas: Yes, really interesting to see. They came out last Thursday 98 00:04:55,190 --> 00:04:57,680 Stephen Koukoulas: and they showed that immigration is still negative. There are 99 00:04:57,680 --> 00:05:02,359 Stephen Koukoulas: more people leaving Australia than coming into Australia, which is 100 00:05:02,570 --> 00:05:05,549 Stephen Koukoulas: the first time that's happened in, since the first World 101 00:05:05,550 --> 00:05:09,120 Stephen Koukoulas: War, 1916 I believe. And so we've got that fall, 102 00:05:09,120 --> 00:05:10,820 Stephen Koukoulas: it's been four quarters in a row that we've had 103 00:05:10,820 --> 00:05:13,219 Stephen Koukoulas: the net outflow of people. We are still having more 104 00:05:13,220 --> 00:05:16,490 Stephen Koukoulas: babies than deaths, that are occurring in society. So population 105 00:05:16,490 --> 00:05:20,760 Stephen Koukoulas: growth in the last year was 0.1%, so basically flat. But 106 00:05:21,060 --> 00:05:24,430 Stephen Koukoulas: the state- by- state figures were interesting. People are leaving 107 00:05:24,450 --> 00:05:29,070 Stephen Koukoulas: Victoria, it's population actually fell in the March quarter. So 108 00:05:29,070 --> 00:05:32,810 Stephen Koukoulas: people have been leaving Victoria, for whatever reason. New South 109 00:05:32,810 --> 00:05:35,830 Stephen Koukoulas: Wales is sort of flat- ish. And Queensland is having 110 00:05:35,830 --> 00:05:37,609 Stephen Koukoulas: a big lift in population, so people are going to 111 00:05:37,610 --> 00:05:37,760 Stephen Koukoulas: the warmer climate up there. 112 00:05:37,760 --> 00:05:38,840 Sean Aylmer: Ah, the sunshine state. 113 00:05:38,840 --> 00:05:43,289 Stephen Koukoulas: Yes, yes. So that's the one experiencing reasonable population growth, 114 00:05:43,290 --> 00:05:45,570 Stephen Koukoulas: when everywhere else was either flat, or in the case of 115 00:05:45,570 --> 00:05:46,770 Stephen Koukoulas: Victoria, falling. 116 00:05:47,180 --> 00:05:49,600 Sean Aylmer: Incredible. Well, that's last week, we'll be back in a 117 00:05:49,600 --> 00:05:51,279 Sean Aylmer: moment and get into the week ahead. 118 00:05:51,279 --> 00:06:00,820 Sean Aylmer: I'm with economist, Stephen Koukoulas, AKA The Kouk. Stephen, not quite as busy this week 119 00:06:00,820 --> 00:06:03,270 Sean Aylmer: as last week, the RBA minutes will be out tomorrow. 120 00:06:03,700 --> 00:06:06,220 Stephen Koukoulas: Yes. There's not a lot of news. The big data 121 00:06:06,220 --> 00:06:08,960 Stephen Koukoulas: flow tends to dry up in the middle of each 122 00:06:08,960 --> 00:06:10,970 Stephen Koukoulas: calendar month. And this is one of those weeks that 123 00:06:11,020 --> 00:06:13,430 Stephen Koukoulas: we're going to be seeing. Yes, just the RBA minutes 124 00:06:13,430 --> 00:06:15,810 Stephen Koukoulas: of their September meeting, which is the one that they 125 00:06:15,910 --> 00:06:19,920 Stephen Koukoulas: left rates and left policy broadly unchanged. So look, we'll 126 00:06:19,920 --> 00:06:22,420 Stephen Koukoulas: scour through them to see whether there's any little insights 127 00:06:22,420 --> 00:06:26,660 Stephen Koukoulas: on inflation or the global economy or... Interestingly, some of 128 00:06:26,660 --> 00:06:29,160 Stephen Koukoulas: these commodity prices are weakening, iron ore's off a bit. 129 00:06:29,160 --> 00:06:31,870 Stephen Koukoulas: So we'll look at the minutes, but nothing really much 130 00:06:31,870 --> 00:06:34,980 Stephen Koukoulas: to go on from them, I'm expecting. And there's very little 131 00:06:34,980 --> 00:06:35,950 Stephen Koukoulas: other domestic data. 132 00:06:36,150 --> 00:06:37,839 Sean Aylmer: Yeah, I'd imagine the markets, though, will keep a pretty 133 00:06:37,839 --> 00:06:39,839 Sean Aylmer: close eye on the US Fed this week. 134 00:06:40,170 --> 00:06:42,380 Stephen Koukoulas: Ah yes, that's the big thing this week. The Federal 135 00:06:42,380 --> 00:06:46,160 Stephen Koukoulas: Reserve's got it's regular Open Market's Committee to discuss monetary 136 00:06:46,160 --> 00:06:49,609 Stephen Koukoulas: policy there. And for those who follow it closely, would 137 00:06:49,610 --> 00:06:51,850 Stephen Koukoulas: be very much aware that there has been chatter, at 138 00:06:51,850 --> 00:06:55,540 Stephen Koukoulas: least, about how the Fed is looking at this lift 139 00:06:55,540 --> 00:06:58,360 Stephen Koukoulas: in inflation that's been evident in the US. Is it 140 00:06:58,380 --> 00:07:02,380 Stephen Koukoulas: temporary, is it transitory or is there something more sinister 141 00:07:02,380 --> 00:07:04,589 Stephen Koukoulas: going on that we're seeing a pickup in inflation? So 142 00:07:04,589 --> 00:07:08,460 Stephen Koukoulas: the Fed, who of course are the custodians of inflation 143 00:07:08,460 --> 00:07:11,850 Stephen Koukoulas: targeting there, will be adding a lot of insights into 144 00:07:11,850 --> 00:07:14,310 Stephen Koukoulas: that. At the moment, the general consensus is that they'll 145 00:07:14,550 --> 00:07:17,050 Stephen Koukoulas: clearly sit tight and just allow the economy to pick 146 00:07:17,050 --> 00:07:21,160 Stephen Koukoulas: up and view the inflation pickup as a transitory effect. 147 00:07:21,390 --> 00:07:23,660 Stephen Koukoulas: And once we get these supply chain issues dealt with, 148 00:07:23,980 --> 00:07:26,410 Stephen Koukoulas: inflation will come back off a bit. But that said, 149 00:07:26,460 --> 00:07:29,460 Stephen Koukoulas: unlike our own RBA that's not really been a market 150 00:07:29,460 --> 00:07:32,410 Stephen Koukoulas: moving body in recent times with its comments, I think 151 00:07:32,410 --> 00:07:34,810 Stephen Koukoulas: we'll be watching the Fed because it's really important for 152 00:07:35,110 --> 00:07:37,739 Stephen Koukoulas: US interest rates and market sentiment in the stock market, 153 00:07:37,810 --> 00:07:39,860 Stephen Koukoulas: which just at the end of last week was a 154 00:07:39,860 --> 00:07:40,740 Stephen Koukoulas: little bit shaky. 155 00:07:41,000 --> 00:07:42,070 Sean Aylmer: Have a great week, Stephen. 156 00:07:42,430 --> 00:07:42,920 Stephen Koukoulas: Thank you, Sean. 157 00:07:43,240 --> 00:07:46,680 Sean Aylmer: That was economist Stephen Koukoulas, better known as The Kouk. You can find him @ 158 00:07:46,900 --> 00:07:49,630 Sean Aylmer: thekouk.com and follow him on Twitter using the handle, @TheKouk. 159 00:07:50,350 --> 00:07:52,760 Sean Aylmer: I'm Sean Aylmer, and this is Fear and Greed, The Week Ahead.