Latest / The SME Stream / Brad Olsen: Infometrics Chief Executive says summer holidays aren't as bad for the economy as some think

Transcript

Brad Olsen: Infometrics Chief Executive says summer holidays aren't as bad for the economy as some think · The SME Stream

• 0:00
  Speaker 1: Debate over the length of these summer breaks been raging,
• 0:02
  Speaker 1: isn't it? For probably the best part of a week now.
• 0:04
  Speaker 1: So we've decided to settle this once and for raw
• 0:06
  Speaker 1: on Drive with the help of economist Brad Olson. He's
• 0:09
  Speaker 1: crunched the numbers. He's with me now, Hey.
• 0:11
  Speaker 2: Brad, good evening.
• 0:12
  Speaker 1: So settle this for us. Are the summer holidays bad
• 0:15
  Speaker 1: for the economy?
• 0:16
  Speaker 2: Not nearly as bad as it's been made out to be. Look,
• 0:19
  Speaker 2: I get that everyone thinks that we take long holidays,
• 0:21
  Speaker 2: and yeah, everyone needs a break. But looking at the numbers.
• 0:24
  Speaker 2: You look at March quarter GDP relative to average quarterly GDP,
• 0:30
  Speaker 2: and it's only two percent below what the average would
• 0:34
  Speaker 2: be for the rest of the year. I mean, that's
• 0:35
  Speaker 2: very much within the error margin across the entire economy.
• 0:39
  Speaker 2: And I think actually where this debate comes forward a
• 0:41
  Speaker 2: lot more is in specific sectors. You look at the
• 0:44
  Speaker 2: likes of you know, supermarket activity or tourism and similar
• 0:49
  Speaker 2: over summer it's cranking. Those people are clearly not taking
• 0:51
  Speaker 2: a break. What is taking a break is the professional
• 0:54
  Speaker 2: services industry's office workers, which are important, but they're not
• 0:58
  Speaker 2: sort of the entire economy and so looking through that
• 1:01
  Speaker 2: economic activity in the professional services industry could sort of
• 1:05
  Speaker 2: fall by up to ten percent relative to more average
• 1:08
  Speaker 2: normal levels in the March quarter. So it's not the
• 1:11
  Speaker 2: entire economy. It's more specifically those of us who work
• 1:14
  Speaker 2: in offices. It's you and me, Ryan, Yeah, and that's
• 1:16
  Speaker 2: why the debate keeps going on. This is why I
• 1:19
  Speaker 2: haven't touched it. I told Laura, haven't touched it because
• 1:21
  Speaker 2: it's just it's the office workers having a winge about
• 1:24
  Speaker 2: their colleagues not coming back and paying attention in January
• 1:27
  Speaker 2: and February. But actually, in the real economy where people
• 1:29
  Speaker 2: get their hands dirty and do real work, everyone's still
• 1:34
  Speaker 2: going well. And you look at spending. That's the other
• 1:37
  Speaker 2: one that sort of gets me. We know that's a
• 1:39
  Speaker 2: big spend up in December. We all have to go
• 1:41
  Speaker 2: and get Christmas presents. Yes, but maybe there was some
• 1:43
  Speaker 2: truth to the idea that you know, spending was going
• 1:46
  Speaker 2: to fall in January. But even taking a look at
• 1:48
  Speaker 2: the numbers there, actually the last couple of years you've
• 1:51
  Speaker 2: seen spending in the January month that's been two percent
• 1:54
  Speaker 2: higher than average monthly spending throughout the calendar year. So
• 1:58
  Speaker 2: even then it's yes, we don't spend like it's Christmas
• 2:00
  Speaker 2: time in January, but we actually spend ever so slightly
• 2:03
  Speaker 2: above a normal month. So again there's still a lot
• 2:05
  Speaker 2: that has to happen. I think it's just that we're
• 2:07
  Speaker 2: spending in different ways, we're going to different places. I
• 2:10
  Speaker 2: also think people do need a break, not just offics,
• 2:13
  Speaker 2: because everyone else as well, and so doing that in
• 2:15
  Speaker 2: a sensible way when the weather's good, when would probably
• 2:18
  Speaker 2: be irritable in the office and out on the job anyway,
• 2:21
  Speaker 2: is not a bad time to take a holiday for
• 2:23
  Speaker 2: many people.
• 2:23
  Speaker 1: Yeah, I don't think you get much argument, certainly nothing
• 2:25
  Speaker 1: out of fossignments on that. Now, wes Pac is actually
• 2:29
  Speaker 1: increasing it's two and five year mortgage interest rates only
• 2:32
  Speaker 1: slightly zero point three percent. What's going on, Well.
• 2:35
  Speaker 2: They've talked a lot about how the wholesale rates have increased.
• 2:38
  Speaker 2: It's the last Reserve Bank announcement. So yes, you've had
• 2:40
  Speaker 2: the official cash rate cut, which means that Westpac's been
• 2:43
  Speaker 2: able to cut their six month rate. They've done nothing
• 2:46
  Speaker 2: to their sort of shorter stuff around the one year.
• 2:48
  Speaker 2: But like you say, two plus years has increased. It
• 2:51
  Speaker 2: does seem to highlight that look, the markets have probably
• 2:54
  Speaker 2: you know, before the Reserve Bank's announcement, we're really gung
• 2:57
  Speaker 2: ho on another cut. When the Reserve Bank came out
• 2:59
  Speaker 2: and said, look, we broadly think that we've sort of
• 3:01
  Speaker 2: done enough. Now the markets have almost reacted over reacted
• 3:05
  Speaker 2: in the other way and gone, you know what, we
• 3:06
  Speaker 2: need to do a little bit more now maybe things
• 3:08
  Speaker 2: are going to go up sooner. Realistically, small adjustments around
• 3:11
  Speaker 2: the margins, but does keep in that conversation of you know,
• 3:14
  Speaker 2: are people going to be fixing short or long? You know,
• 3:17
  Speaker 2: because there's a lot of variation now and offer and
• 3:19
  Speaker 2: I think people have sort of got to keep their
• 3:20
  Speaker 2: wits about you. Now's the time to go and get
• 3:22
  Speaker 2: some of that professional advice if your fix is coming
• 3:25
  Speaker 2: up soon.
• 3:25
  Speaker 1: Yeah, I think a lot of people are going to
• 3:26
  Speaker 1: listen to this and see watch the rates and run
• 3:29
  Speaker 1: out there and fix. Thank you very much for that.
• 3:32
  Speaker 1: That's Brad Olson in for Metrics. For more from Heather
• 3:35
  Speaker 1: Duplessy Allen Drive, listen live to news Talks it'd be
• 3:38
  Speaker 1: from four pm weekdays, or follow the podcast on iHeartRadio.