Latest / The SME Stream / Brad Olsen: Infometrics Principal Economist on NZ may have to downgrade economic outlook as result of Trump's re-election

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Brad Olsen: Infometrics Principal Economist on NZ may have to downgrade economic outlook as result of Trump's re-election · The SME Stream

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  Speaker 1: Economists are warning that we may have to downgrade our
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  Speaker 1: economic outlook as a result of Donald Trump's election because
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  Speaker 1: analysts from BMI, which is part of Pitch Reckon, we're
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  Speaker 1: going to lose ten percent of growth two percent growth
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  Speaker 1: down to one point eight percent next year. Brad Olson
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  Speaker 1: is in for Metrics Principal economis and with US Now.
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  Speaker 1: Hello Brad, Hello, nice to have you in the studio.
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  Speaker 1: Thank you for coming in. Brad. Is this based entirely
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  Speaker 1: on the prospect of him doing the tariffs.
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  Speaker 2: I don't think it's just the tariffs. The tariffs do
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  Speaker 2: make a bigger part, and certainly longer term. I think
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  Speaker 2: we're almost more worrying because if the US puts on
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  Speaker 2: the tariffs, doesn't buy as much mo overseas, there's not
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  Speaker 2: as much need for overseas to produce stuff. Therefore there's
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  Speaker 2: not as many manufacturing jobs overseas and they don't have
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  Speaker 2: money that they then spend on our stuff. But I
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  Speaker 2: think also importantly, if Trump then comes through with some
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  Speaker 2: of the tax cuts in that that he wants to
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  Speaker 2: bring through, most expectations from US economists is that that
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  Speaker 2: would be inflationary. Therefore next year there's not as much
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  Speaker 2: need for the Federal Reserve to cut interest rates back,
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  Speaker 2: so there's not as much economic growth coming forward if
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  Speaker 2: that's the case, if interest rates have to stay higher.
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  Speaker 2: So I think it's a combination of the tariffs but
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  Speaker 2: also of his other economic policies that would almost drive
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  Speaker 2: too much short term economic growth in the US, which
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  Speaker 2: would cause an inflation to be higher, and then interest rates.
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  Speaker 1: And then how much of it also, I mean, because
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  Speaker 1: he's really he I mean, he is intending to make
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  Speaker 1: life very difficult for China. Right, how much of this
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  Speaker 1: is squeezing China's economy, which we're reliant on.
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  Speaker 2: Yeah, I mean that's a big enough part of it,
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  Speaker 2: particularly when the Chinese economy is not doing great to
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  Speaker 2: start with, right. But I think also interesting, I mean,
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  Speaker 2: the question for me is how quickly does this come through?
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  Speaker 2: And it's been fascinating the last day or so looking
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  Speaker 2: at some of Trump's cabinet picks. He's picked, you know,
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  Speaker 2: the head of the EPA, He's picked someone to run
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  Speaker 2: the border. He's picked by the likely bud sounds of
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  Speaker 2: secretary of State, no Treasury secretary yet or anything like that.
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  Speaker 2: So I do sort of wonder if he's made it
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  Speaker 2: a bit clearer. He wants to do stuff around environmental regulation,
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  Speaker 2: he wants to change border settings and what have you.
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  Speaker 2: He doesn't seem like he wants to go gung ho.
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  Speaker 2: You know, first minute of his presidency will be tariff.
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  Speaker 2: This might be a slightly more delayed impact coming through
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  Speaker 2: on the economy. It might not hit day one.
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  Speaker 1: I do not believe he's going to do the tariffs.
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  Speaker 1: I just I think the reason being that I think
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  Speaker 1: he says a lot of stuff that is designed. Like
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  Speaker 1: any deal maker, right, you say a lot of stuff
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  Speaker 1: up front, you freak people out, and then you soften
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  Speaker 1: your position, and then you strike the deal. And I
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  Speaker 1: just wonder if the tariffs are that. And I think
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  Speaker 1: because I think that when he thinks it through and realizes,
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  Speaker 1: as has been pointed out to me, how much of
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  Speaker 1: our stuff go as componentry goes into other things, and
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  Speaker 1: what the impact that that's going to have, I don't
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  Speaker 1: think it's going to be a good idea for him.
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  Speaker 2: Well, but this is the challenge, right, does he believe
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  Speaker 2: that he's going to do it? No one's got that
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  Speaker 2: certainty either way, because I guess the other risk is
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  Speaker 2: that he sort of doesn't do it immediately, everyone drops
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  Speaker 2: their guard and then all of a sudden, bang, he
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  Speaker 2: puts twenty percent tariffs on and so that unexpectedness I
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  Speaker 2: think is causing a little bit, maybe not volatility, just
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  Speaker 2: everyone's questioning at all. And I think also he's been
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  Speaker 2: pretty clear as an incoming president he wants more manufacturing
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  Speaker 2: in the US, and tariff's would do that to a degree.
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  Speaker 2: It would still cost the economy overall, but if he
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  Speaker 2: does want to get some of those blue collar, you know,
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  Speaker 2: manufacturing jobs back, and that could be a way to
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  Speaker 2: do it.
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  Speaker 1: Bred We're going to talk to retail New Zealand in
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  Speaker 1: about well maybe like fifteen minutes or thereabout. It's about
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  Speaker 1: what they're expecting for the upcoming Christmas season because the
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  Speaker 1: credit can't spending was pretty flat last month.
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  Speaker 2: What do you reckon? Well, we got a new card
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  Speaker 2: spending today which actually so sort of a continued flattening off.
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  Speaker 2: Maybe a little bit of a boost coming through in
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  Speaker 2: the seasonally adjusted numbers. It's not enough to sort of
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  Speaker 2: call this a Christmas bonanza yet, but maybe some slightly
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  Speaker 2: better news. Those interest rates staying to have an impact.
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  Speaker 2: I think the thing we'll all be waiting for is
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  Speaker 2: those Black Friday sales that come through some of the
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  Speaker 2: Cyber Monday stuff like are people spending or not? Because
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  Speaker 2: I keep hearing people that sort of say, if the
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  Speaker 2: special wasn't good enough, if there's not enough deals going around,
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  Speaker 2: I'm still not buying. So maybe some early signs, but
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  Speaker 2: I don't think it's enough to make for a great Christmas.
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  Speaker 1: Yeah, it doesn't look like it. So have you done
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  Speaker 1: that thing that everybody does where you combine work with
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  Speaker 1: a Coldplay concert?
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  Speaker 2: I very much have. I am happy. I've got some
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  Speaker 2: work meetings in the next couple of days, but I've
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  Speaker 2: also got an appointment with coldplaymorrow night with you and
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  Speaker 2: a few other people. By the sound, Yeah, I'm going
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  Speaker 2: to be there.
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  Speaker 1: We're going to be raging out together, aren't we.
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  Speaker 2: It's going to be good. You'll be Coldplay fan or
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  Speaker 2: what I am? I mean? Fix you as my go
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  Speaker 2: to I'm not the most upbeat song in my life,
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  Speaker 2: but maybe that fits with the dismal science of economics
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  Speaker 2: that you know a little bit downbeat every now and then.
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  Speaker 2: But I will try and fix you with the economics overall.
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  Speaker 1: I'll tell you what, why don't we get Adrian to
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  Speaker 1: listen to fix you instead of what he's trying to.
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  Speaker 2: Do to the economy. I think that a sky full
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  Speaker 2: of stars might be more apped at points.
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  Speaker 1: Oh jeez, is there a song about trees? Because I
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  Speaker 1: don't believe does identify as one of them.
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  Speaker 2: The scientist's clocks and otherwise, but yeah, I'm not sure
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  Speaker 2: about trees. Jeez.
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  Speaker 1: Hey, enjoy the concert and thanks for coming and really
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  Speaker 1: appreciate it. That is brad Olsen Infametric's principle economists