The Week Ahead | 16 Dec 2024

Published Dec 15, 2024, 4:45 PM

This is Fear and Greed - The Week Ahead, where Sean Aylmer and Stephen Koukoulas discuss the major events, reports and releases that provide insight into the economy this week (with a look back at the events of last week too).

Welcome to Fear and Greed the week Ahead. I'm Sean Almer, and as always I'm joined by economist Stephen Kukulas for the last time this year. You'll find Stephen at the Cook dot com, t h e k o uk dot com and on X using the handle the Kirk Stephen.

Good morning, Good morning, Sean.

What a cracking way to finish a year of economics with that labor force figure last week.

Well, when we saw that on Thursday, I think it was shockingly fantastic. Yeah.

One of the things that US economists love and one of the reasons we worried about tax reform that we worry about, you know, education and infrastructure and all those other things productivity is to get the unemployment rate as low as possible, and of course that's one of the aims of the RBA. So when we saw that three point nine the said unemployment rate hit the screens last Thursday, there was an audible oh coming from around Australia, I think from the economists because no one, no one in their right mind saw that coming, particularly on the back of the week it growth, and it really started a debate that this debate will probably take some time to resolve like months and if not a year. Have we got the situation in Australia where that Maru the full employment unemployment rate is sort of like three and a half to four percent. Professor Garno thinks that. So there's one very smart person who thinks that, or is it the four and a half of the RBA and most of us was sort of thinking before last week and if it is lower, it does have implications still for interest rates. Even though the knee jerk reaction to wow, that's an incredibly low unemployment rate was to push back the timing of the rate cut. It was a game changing number. It was extraordinary. Now we want to see another one or two months of it, but it was extraordinary.

We kind of end the year. It hasn't been a bad year. I know economic growth is slow, but inflation is ticking. Lower interest rates the new normal is certainly higher interest rates than they were five years ago. You know, we've got this incredible employment market. We're not too badly.

Off really, and I think that's the point that the RBA made last week with the Onhole decision, which again I think everybody thought, and we had the government to give her press conference, and then the Deputy Governor Andrew Howes are giving a speech on I think it was Wednesday night last week, and they were sort of saying a similar sort of thing. Look, we're worried via economists to pay to be worried about the next sort of bad bit of news to come along. But as we reflect on what happened in twenty twenty four, and you said the unemployment rate, that's called it hovering at four percent basically for the whole year, job creation is still being pretty good, Inflation ticking down, wages while they've come off the highs are still higher than inflation, so that's a good thing. And then things like you know, the ASX you're bumping at record hives all through the latter part of the year too, Like that's a good thing. And the housing market, well something for everybody because prices are starting to eise just to smidge too, so that affordability is not a stretch. But people have got to still as rich as can be. And so you sort of take stock for a minute, we're doing okay.

I wonder whether that'll come out in the election next year, the people that we are actually doing okay.

Well, I'm talking to macro thing is yes, because within that, yeah, within that overarching economic growth, full employment, all these other things. And there's a few other theories going around about why the labor market's been so strong, which is a structural change. So just if I can spend twenty seconds on it, if you're being told to do a few hours, or you've been sacked from your job in retail or hospitality, unlike the old days, when you're unemployed, nowadays you just go to Uber, you open up an Uber driver account and you become an Uber driver to at least get a bit of cash flow to keep your household on the book. So your count is employed even though you were made unemployed by your previous employees. So that structural change, those sorts of change, is how easy it is to set up a new occupation for yourself if you're desperate for money and you've got mortgages and range and kids and all these other things to do.

It's made those numbers argue with a bit harder to read.

Stephen, Actually, not much going on this week, which is fair enough because we're almost at Christmas. I think it's time for all you economists have a break. But there isn't much on this week?

Is there? Not much? The only thing that I think popping up is the my EFO.

Oh of course, Jim Charmers will be releasing the budget update, and you sort of alluded to bits and pieces of this, and you know, all the smart people who sort of dig through the budget numbers are sort of saying that the budget deficit that they forecast in May, so six seven months ago now will not be that much different. They're punting for a deficit of about twenty eight billion when the budget was handed down back in May. Look, there's been something's a bit weaker, something's a bit stronger. And I think, as we allud it to the beginning, it's not that different to what Treasury was thinking. So the budget deficit number, which of course everyone will look at, will be there or thereabouts. It won't be a massive difference from the twenty eight billion that Charmers was forecasting. And do you know what, I think most people will glance at it and then go off to their Christmas parties or down to the beach watch the cricket.

Now, you do know, Stephen that during the summer, in that first week of January, we're going to interrupt your holiday and we're going to get you to come on the show and talk about the economy. We won't until then. We're going to give you a good ten day break or whatever, maybe two week break you but we want you back.

I'll be back and look and we'll have a bit of a I guess we're going to have a bit of a sort of look at the year ahead in January when we get together again and sort of well where are we like, I'll have a chance to over Christmas time to you know, put my feed up, as I said, watch the cricket, have a nice meal with my lovely family and reflect on where this is the economy in twenty twenty five, and we'll churn about it then.

Fantastic, Thank you very much for everything this year, Steven, and enjoy your break.

And enjoy your break too, and to everybody out there, fantastic love, love you's all.

Thanks.

That was the kind of a Stephen could cool us better known as love you as all the Kook. You can find him at thecook dot com and follow him on x using the handle the Cook. I'm sure on ail man. And this is fear and greed. The Week Ahead

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