Even at the Greens, intersectionality doesn’t win you a ballot. Lol.

Public final demand is now 28.9% of GDP, basically back at pandemic levels and around 4 percentage points above its pre-COVID share. I think that increase in expenditure, roughly $120 billion a year at today’s GDP, is what people are concerned about. But it’s a slightly funny category. A lot of it is government purchasing services on behalf of households, including aged care, disability and childcare. So this isn’t necessarily conventional fiscal stimulus, but it is a substantial shift towards publicly financed demand. The 450bp increase in the policy rate isn’t really relevant to explaining public final demand. Its level is overwhelmingly a fiscal policy choice.

Qatar is only two weeks away from making a nuclear bomb! 🤨

I hope so. But it’s a bit early to tell whether the productivity payoff will match the scale of the investment. We also don’t know yet how much of any productivity payoff will come from enhancing workers versus replacing them, or how those gains will be distributed across industries and occupations.

Today's lower than anticipated trimmed mean print (0.244% m/m) has pushed the next fully anticipated RBA rate hike from March to May 2027.

(1) Australia was ahead of the raising curve - so some outsized benefit for our initial hikes. (2) relativities matter, so if we don't continue to raise and others do, our unchanged policy rate is less contractionary/more expansionary because of the relativities. So if inflation is above target, and others are moving, we need to move.

Encouraging. But one good monthly print is way to early to declare victory.

Credit is outrunning nominal GDP. A significant part of the business-credit acceleration appears to be financing a genuine non-mining investment boom, with IT investment doing much of the heavy lifting. That’s inflationary demand in the short run, but potentially productivity-enhancing supply in the medium run.

I really, really wish one (1) mainstream economics commentator would point out that interest rates rises do not, in fact, primarily work by 'smashing mortgage holders'. Exchange rate and asset price channels are far, far more important! And they barely get a mention!

And diesel ultimately gets built into the price of a lot of things. Crude ticking down suggests more barrels are getting out of the Middle East, while Singapore refined-product prices are starting to flatten out. So there are at least some encouraging signs at the margin.

Markets sniff that more hikes are less likely than they thought yesterday. And who knows, if this softer trend continues, maybe a cut in 6-9 months might be possible.

Inflation: seasonally adjusted headline inflation rose to 3.9%, while trimmed mean was unchanged at 3.6%. Monthly trimmed mean was 0.24%, or about 3% annualised. The monthly TM print is somewhat encouraging, but the year-ended measures remain too high. I don’t think today’s print forces the RBA to hike again in November, but it will remain alert to upside inflation risks. There is one more CPI print before the next meeting of the RBA Committee.

You will note in the footnote that I have already adjusted for headkine inflation.

The arithmetic is simple. $44bn is about 1.5% of GDP. Treat that as 1.5% of demand, then use the RBA estimate that 25bp of tightening reduces GDP by about 0.2%. 1.5 / 0.2 = 7.5 cuts. You can make that arithmetic work. But notice what it means economically: you first remove the activity, jobs and incomes supported by that spending. That rapidly shrinks demand, which is precisely why the RBA would then need to slash rates. That’s the part the headline leaves out. It can be achieved. It has consequences.

I think people are responding to the growth since 2022.

It’s the streaker’s excuse: "It seemed like a good thing at the time, Your Honour."

The mining boom is the driver in the first decade this century.