1 00:00:00,040 --> 00:00:02,520 Speaker 1: Debate over the length of these summer breaks been raging, 2 00:00:02,560 --> 00:00:04,320 Speaker 1: isn't it? For probably the best part of a week now. 3 00:00:04,360 --> 00:00:06,480 Speaker 1: So we've decided to settle this once and for raw 4 00:00:06,600 --> 00:00:09,399 Speaker 1: on Drive with the help of economist Brad Olson. He's 5 00:00:09,440 --> 00:00:11,200 Speaker 1: crunched the numbers. He's with me now, Hey. 6 00:00:11,039 --> 00:00:12,560 Speaker 2: Brad, good evening. 7 00:00:12,640 --> 00:00:15,040 Speaker 1: So settle this for us. Are the summer holidays bad 8 00:00:15,040 --> 00:00:15,760 Speaker 1: for the economy? 9 00:00:16,960 --> 00:00:19,360 Speaker 2: Not nearly as bad as it's been made out to be. Look, 10 00:00:19,400 --> 00:00:21,800 Speaker 2: I get that everyone thinks that we take long holidays, 11 00:00:21,800 --> 00:00:24,840 Speaker 2: and yeah, everyone needs a break. But looking at the numbers. 12 00:00:24,880 --> 00:00:30,200 Speaker 2: You look at March quarter GDP relative to average quarterly GDP, 13 00:00:30,680 --> 00:00:34,240 Speaker 2: and it's only two percent below what the average would 14 00:00:34,240 --> 00:00:35,479 Speaker 2: be for the rest of the year. I mean, that's 15 00:00:35,600 --> 00:00:39,160 Speaker 2: very much within the error margin across the entire economy. 16 00:00:39,320 --> 00:00:41,839 Speaker 2: And I think actually where this debate comes forward a 17 00:00:41,840 --> 00:00:44,519 Speaker 2: lot more is in specific sectors. You look at the 18 00:00:44,640 --> 00:00:49,000 Speaker 2: likes of you know, supermarket activity or tourism and similar 19 00:00:49,120 --> 00:00:51,880 Speaker 2: over summer it's cranking. Those people are clearly not taking 20 00:00:51,880 --> 00:00:54,600 Speaker 2: a break. What is taking a break is the professional 21 00:00:54,640 --> 00:00:58,440 Speaker 2: services industry's office workers, which are important, but they're not 22 00:00:58,560 --> 00:01:01,320 Speaker 2: sort of the entire economy and so looking through that 23 00:01:01,480 --> 00:01:05,840 Speaker 2: economic activity in the professional services industry could sort of 24 00:01:05,840 --> 00:01:08,560 Speaker 2: fall by up to ten percent relative to more average 25 00:01:08,600 --> 00:01:11,039 Speaker 2: normal levels in the March quarter. So it's not the 26 00:01:11,240 --> 00:01:14,520 Speaker 2: entire economy. It's more specifically those of us who work 27 00:01:14,520 --> 00:01:16,839 Speaker 2: in offices. It's you and me, Ryan, Yeah, and that's 28 00:01:16,959 --> 00:01:19,039 Speaker 2: why the debate keeps going on. This is why I 29 00:01:19,040 --> 00:01:21,800 Speaker 2: haven't touched it. I told Laura, haven't touched it because 30 00:01:21,800 --> 00:01:24,759 Speaker 2: it's just it's the office workers having a winge about 31 00:01:24,800 --> 00:01:27,160 Speaker 2: their colleagues not coming back and paying attention in January 32 00:01:27,160 --> 00:01:29,919 Speaker 2: and February. But actually, in the real economy where people 33 00:01:29,959 --> 00:01:34,360 Speaker 2: get their hands dirty and do real work, everyone's still 34 00:01:34,400 --> 00:01:37,600 Speaker 2: going well. And you look at spending. That's the other 35 00:01:37,640 --> 00:01:39,240 Speaker 2: one that sort of gets me. We know that's a 36 00:01:39,240 --> 00:01:41,039 Speaker 2: big spend up in December. We all have to go 37 00:01:41,080 --> 00:01:43,840 Speaker 2: and get Christmas presents. Yes, but maybe there was some 38 00:01:43,920 --> 00:01:46,360 Speaker 2: truth to the idea that you know, spending was going 39 00:01:46,400 --> 00:01:48,520 Speaker 2: to fall in January. But even taking a look at 40 00:01:48,520 --> 00:01:51,640 Speaker 2: the numbers there, actually the last couple of years you've 41 00:01:51,640 --> 00:01:54,520 Speaker 2: seen spending in the January month that's been two percent 42 00:01:54,680 --> 00:01:57,680 Speaker 2: higher than average monthly spending throughout the calendar year. So 43 00:01:58,000 --> 00:02:00,680 Speaker 2: even then it's yes, we don't spend like it's Christmas 44 00:02:00,680 --> 00:02:03,480 Speaker 2: time in January, but we actually spend ever so slightly 45 00:02:03,480 --> 00:02:05,600 Speaker 2: above a normal month. So again there's still a lot 46 00:02:05,640 --> 00:02:07,280 Speaker 2: that has to happen. I think it's just that we're 47 00:02:07,320 --> 00:02:10,840 Speaker 2: spending in different ways, we're going to different places. I 48 00:02:10,880 --> 00:02:13,520 Speaker 2: also think people do need a break, not just offics, 49 00:02:13,600 --> 00:02:15,720 Speaker 2: because everyone else as well, and so doing that in 50 00:02:15,760 --> 00:02:18,360 Speaker 2: a sensible way when the weather's good, when would probably 51 00:02:18,360 --> 00:02:21,080 Speaker 2: be irritable in the office and out on the job anyway, 52 00:02:21,320 --> 00:02:23,040 Speaker 2: is not a bad time to take a holiday for 53 00:02:23,120 --> 00:02:23,600 Speaker 2: many people. 54 00:02:23,680 --> 00:02:25,600 Speaker 1: Yeah, I don't think you get much argument, certainly nothing 55 00:02:25,639 --> 00:02:29,080 Speaker 1: out of fossignments on that. Now, wes Pac is actually 56 00:02:29,160 --> 00:02:32,119 Speaker 1: increasing it's two and five year mortgage interest rates only 57 00:02:32,160 --> 00:02:35,640 Speaker 1: slightly zero point three percent. What's going on, Well. 58 00:02:35,440 --> 00:02:38,040 Speaker 2: They've talked a lot about how the wholesale rates have increased. 59 00:02:38,040 --> 00:02:40,560 Speaker 2: It's the last Reserve Bank announcement. So yes, you've had 60 00:02:40,600 --> 00:02:43,760 Speaker 2: the official cash rate cut, which means that Westpac's been 61 00:02:43,760 --> 00:02:46,120 Speaker 2: able to cut their six month rate. They've done nothing 62 00:02:46,200 --> 00:02:48,880 Speaker 2: to their sort of shorter stuff around the one year. 63 00:02:48,919 --> 00:02:51,680 Speaker 2: But like you say, two plus years has increased. It 64 00:02:51,720 --> 00:02:54,160 Speaker 2: does seem to highlight that look, the markets have probably 65 00:02:54,400 --> 00:02:57,120 Speaker 2: you know, before the Reserve Bank's announcement, we're really gung 66 00:02:57,160 --> 00:02:59,520 Speaker 2: ho on another cut. When the Reserve Bank came out 67 00:02:59,520 --> 00:03:01,560 Speaker 2: and said, look, we broadly think that we've sort of 68 00:03:01,560 --> 00:03:04,960 Speaker 2: done enough. Now the markets have almost reacted over reacted 69 00:03:05,000 --> 00:03:06,200 Speaker 2: in the other way and gone, you know what, we 70 00:03:06,240 --> 00:03:08,200 Speaker 2: need to do a little bit more now maybe things 71 00:03:08,200 --> 00:03:11,360 Speaker 2: are going to go up sooner. Realistically, small adjustments around 72 00:03:11,400 --> 00:03:14,320 Speaker 2: the margins, but does keep in that conversation of you know, 73 00:03:14,440 --> 00:03:17,080 Speaker 2: are people going to be fixing short or long? You know, 74 00:03:17,200 --> 00:03:19,440 Speaker 2: because there's a lot of variation now and offer and 75 00:03:19,480 --> 00:03:20,800 Speaker 2: I think people have sort of got to keep their 76 00:03:20,800 --> 00:03:22,799 Speaker 2: wits about you. Now's the time to go and get 77 00:03:22,800 --> 00:03:25,000 Speaker 2: some of that professional advice if your fix is coming 78 00:03:25,040 --> 00:03:25,359 Speaker 2: up soon. 79 00:03:25,440 --> 00:03:26,760 Speaker 1: Yeah, I think a lot of people are going to 80 00:03:26,800 --> 00:03:29,760 Speaker 1: listen to this and see watch the rates and run 81 00:03:29,800 --> 00:03:32,120 Speaker 1: out there and fix. Thank you very much for that. 82 00:03:32,120 --> 00:03:35,120 Speaker 1: That's Brad Olson in for Metrics. For more from Heather 83 00:03:35,200 --> 00:03:38,240 Speaker 1: Duplessy Allen Drive, listen live to news Talks it'd be 84 00:03:38,360 --> 00:03:42,200 Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio.