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Speaker 1: For the second time this week. We knew that the

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Speaker 1: data was going to be bad, but we didn't know

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Speaker 1: it was going to be this bad, did we. The

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Speaker 1: GDP in the third quarter was down a full percentage point.

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Speaker 1: That's much worse than the zero point two percent that

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Speaker 1: was expected the previous quarter. Q two has also been

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Speaker 1: revised down even further, making this the worst recession that

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Speaker 1: we've had excluding COVID since nineteen ninety one. West Pax

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Speaker 1: senior economist Michael Gordon's with us Morning, Michael, Michael, Ye there.

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Speaker 2: Yes, good morning, Good morning.

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Speaker 1: Hey why was this so much worse? Do you think

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Speaker 1: than the forecasts?

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Speaker 2: It's never one thing that drives it. I think one

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Speaker 2: thing that did stand out was a little more recognition

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Speaker 2: of the cutbacks in the public sector, which weren't initially

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Speaker 2: being fully captured the figures we were looking at three

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Speaker 2: months ago.

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Speaker 1: This does this to some extent, explain what we were

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Speaker 1: hearing from people out there who were saying, this is

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Speaker 1: really tough. It's the worst thing we've seen in forty years,

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Speaker 1: and these figures back it up.

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Speaker 2: Yeah. I think it's certainly showing that the the kind

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Speaker 2: of grind that we've had really through this year is

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Speaker 2: now showing up a bit more fully than that the

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Speaker 2: GDP numbers that we saw three months ago. I tend

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Speaker 2: to think because GDP can be revised a lot, I

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Speaker 2: tend to say, if you want to know what's going

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Speaker 2: on in the economy right now, probably best to look

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Speaker 2: at the jobs numbers, because they're not vulnerable to the

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Speaker 2: same kind of issues, and they had been telling a

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Speaker 2: similar story. We did see quite a cutback in jobs

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Speaker 2: through the middle part of this year, especially, They look

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Speaker 2: to have stabilized a bit more recently, and we're also

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Speaker 2: seeing things like business confidence, consumer confidence surveys. People are

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Speaker 2: feeling a little bit more upbeat.

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Speaker 1: Now, how do we explain stats getting the second quarter

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Speaker 1: figures so badly wrong, going originally saying it was negative

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Speaker 1: zero point two and now saying it's negative one point one.

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Speaker 2: It's a terribly boring explanation. I'm afraid there's a lot

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Speaker 2: of it came through changes in the way that they

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Speaker 2: adjust for seasonality in the numbers, So it's really about

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Speaker 2: it doesn't change the the overall growth rate, it kind

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Speaker 2: of changes when they think the growth occurred within the year.

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Speaker 2: I'm not entirely happy with what they've done with it.

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Speaker 2: To be honest, I think it might be revised again

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Speaker 2: in the future, up or down. I think probably that

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Speaker 2: court will go up, others will go down.

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Speaker 1: Okay, Now, look, when you look at it broken down

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Speaker 1: by sector, it feels like some of the stuff that's

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Speaker 1: happened in Q three or stuff we couldn't have dodged,

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Speaker 1: like the decline in electricity and gas, and we've got

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Speaker 1: no control over that. And I guess some of the

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Speaker 1: decline and manufacturing is related to that. Or am I

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Speaker 1: being a little too generous here?

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Speaker 2: Now? There's always one off things in these numbers that

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Speaker 2: you sort of look through, and as a full castra

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Speaker 2: I'm sort of going, well, I know that the hydro

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Speaker 2: lakes are full now, so I don't think we'll have

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Speaker 2: the same issues with electricity, but it always happens. I

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Speaker 2: think if you move through you can see things like

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Speaker 2: we've seen sectors like construction, manufacturing, retail. You know, they've

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Speaker 2: kind of been in decline for a while and they're

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Speaker 2: quite cyclical, quite interestrate sensitive sectors. So I was really

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Speaker 2: telling a story of we had high into straight for

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Speaker 2: the last year or so.

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Speaker 1: Yeah, Michael, Thanks, it's really good to talk to you.

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Speaker 1: That's Michael Gordon, Westpac senior economists. Just to give you

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Speaker 1: some international comparison to understand how badly we're doing. We

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Speaker 1: went backwards in Q three one percent right negative one.

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Speaker 1: Australia up zero point three, Canada up zero point three,

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Speaker 1: China up zero point nine, Japan up zero point three,

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Speaker 1: Britain up zero point one, United States up zero point seven.

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