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Hedge Clippings | 08 December 2023
There may have been a change at the head of the Reserve Bank board table, but whoever writes the Governor's statement and media release following the meeting is stuck in a groove. Apart from the absence of Philip Lowe's favourite "narrow path" term, the perils of inflation and the necessity to curb it are pretty much a copy and paste from prior months, which we suppose is inevitable.
Equally consistent is the warning that the board won't hesitate to act as required, and that while the numbers are encouraging, they're not sufficiently clear to say that the battle has been won. However, the September quarter GDP figures released on Wednesday show a pretty clear picture, with growth of just 0.2%, down from 0.4 %, 0.5% and 0.9% in the previous quarters. If it hadn't been for government spending and fixed capital expenditure both rising by 1.1% then the picture would have been different. Household spending was flat - understandable given interest rates having taken effect, and the household savings to income ratio fell for the 8th straight quarter to 1.1%, its lowest level since December 2007.
There are still some economists hanging out for one more rate rise in February next year when the RBA board reconvenes, but surprises aside, we doubt it.
On a different note, the ABS released their population projections - carefully noting they're not forecasts - indicating that by 2071 (when yours truly will well and truly have left the stage, or if not, won't have any marbles left) the current population of 26 million will have grown to between 34 and 46 million, and the median age to have increased from 38.5 to between 43.8 and 47.6 years. Given the current traffic problems, and the plans for high-rise development to house them all, and the fact this is apparently the hottest year on record, we're glad we won't be part of it.
Among the assumptions from the ABS are that net overseas migration will average 225,000 people (medium estimate) and up to 275,000 based on a higher estimate. Given migration this year is tipped to be well over 400,000 that's likely to be conservative. Hedge Clippings isn't anti-migration per se, we just hope that various governments work out the logistics, housing and infrastructure required to accommodate the increase.
Finally, "pretty boy" Ablo and "potato head" Dutton wished each other happy holidays as the Federal Parliament broke for Christmas this week. With no pollies to listen to for the next 2 months, at least the levels of hot air should decrease.
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