Today’s economic data shows just how hard interest rates are now hitting households, and an economy growing at a sluggish rate not seen since the early 1990s.
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00:00Well the Treasurer Jim Chalmers knows that these numbers are weak. There's no denying
00:06that the growth of 0.2% through the June quarter and then just 1% across the year, those were
00:14the new numbers that we got in the national accounts yesterday. As you said, it is outside
00:20of the pandemic, the weakest economic growth since the early 90s. Now GDP per person that
00:27also fell for the sixth quarter in a row. So households are really doing it tough. They're
00:32having to pull back on saving, not putting as much money into their savings accounts
00:37and also pulling back on household spending, particularly things like eating out and spending
00:42money on flights around the country too. So economists say this is though the clearest
00:48sign yet that monetary policy in Australia is restrictive enough and of course this is
00:55why the eyes will turn to the Reserve Bank Governor Michelle Bullock when she speaks
00:59a little later today. She's giving a speech titled The Costs of High Inflation and so
01:05she'll be answering questions no doubt related to the national accounts figures yesterday.
01:11So economists are saying with this weaker spending it should hopefully lead to inflation
01:16coming down. Of course that target band is within 2-3% and then hopefully the Reserve
01:22Bank will have the scope to be able to cut interest rates. But really yesterday it was
01:28government spending and migration that was propping up the economy. But debate this morning
01:34about whether government spending of that amount is good, particularly in the long term.
01:40Any relief is welcome. But the problem with that relief is it's just the Band-Aid on the
01:45bullet hole. It's not actually fixing the problem at its source. Rather than delivering
01:49lower energy prices, the government's delivering subsidies for higher energy prices. Once those
01:54subsidies are removed, well of course that increases the price again and that causes
01:59inflation to go up. I don't take economic advice from the opposition. Obviously they're
02:03there to make a political point. Our focus, Jim and my focus, is really on making the
02:08right decisions for the right time. That's why in Budget we made some decisions about
02:13cost of living support. We knew this quarter would be difficult and government has a role
02:18to play.
02:20So we'll hear from RBA Governor Michelle Bullock a little later today. Of course, interest
02:25rates is something that's putting a lot of pressure on households right across the country.
02:30So it is something that matters a lot to Australians.