Wednesday, 7 March 2018

A few things on the National Accounts

Okay GDP fell below trend to be at 2.4% ( 2017 was 2.3%).

Productivity growth has been low . We thus have very strong employment growth which would normally imply growth of around 3% not 2.3%. This is a worry.

Business investment on the non-mining side of the economy has picked pretty well in the last 6 months.

Household consumption has held up pretty well considering how stagnant wages have been however unless wages pick up this is unsustainable.

The public sector is giving a stimulus to the economy and will continue to do so given all the infrastructure projects in the pipeline pun intended). Net exports were a drag on growth this quarter but should not be in quarters to come.

Most importantly nominal GDP growth is starting to get a bit of steam up hence the improvement in government revenues we have written about recently.

Normally this would be a plus in political terms however this is a government who is fighting amongst themselves with some wanting them to lose the next election so I think this will be ignored!

Hmm Me thinks Greg Jericho is a tad too bearish.
Ross Gittins seems to be on my side, my guess he has been talking to RBA persons