Michael Gordon: Westpac Senior Economist ahead of the release of the GDP figures for last quarter

Banks are split over what today's GDP figures will show.  

Stats NZ will release the data for the first quarter of the year this morning.  

Westpac, BNZ, and Westpac are picking a small contraction, while ANZ and ASB are picking a small expansion.  

Westpac Senior Economist Michael Gordon told Mike Hosking that everyone's in a similar range, slightly above or slightly below zero.  

He says it's when we've had strong population growth which should provide a baseline of growth, but it seems we're going backwards in per person terms. 

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Episode Transcript

Speaker 1 (00:00):
Morning, seven past seven. Who doesn't love GDP day? Are
we still in recession or not? It's the print for
Q one. Jan Febin March Banks A split Westpac, que
Bank B and z C of four A and zed
ASBC growth. Westpac senior economist Michael Gordon with us, good morning,
Good morning. As far as the banks are concerned, you're
at the negative end of the spectrum. Why you there
and others are up? How are you down? And there up? Well?

Speaker 2 (00:22):
I think firstly, everyone's in a pretty similar range. It's
either slightly above or slightly below zero growth. And bearing
in mind this is when we've also still had some
pretty strong population growth through that time, you'd think that
would provide a little bit of a baseline of growth and activity.
But I think everyone's saying was sort of backwards in
per person.

Speaker 1 (00:39):
Terms exactly, So carry on.

Speaker 2 (00:42):
I think in terms of detailed I would just like
to highlight this where we see the weakness. It is
concentrated in a few areas, like building. It's not necessarily
a widespread scene. But that said, that's not really any
area that standing out is particularly strong at the moment.

Speaker 1 (00:55):
Okay, so's say you're right for Q one can we
write Q two off, which we're just about to wrap up.
In other words, Q two can't have been better than
Q one.

Speaker 2 (01:03):
No, it's not looking great, and we do have a
small minus penciled into that one as well as some
of the indicators are coming in. It's you know, it's
certainly not looking flash at the moment, and I think
it's really a story of it's it's probably going to
be something either side of zero growth or for much
of this year.

Speaker 1 (01:18):
Yeah, I was going to say, because I can't see
what it is that happens. We all seem to be
holding out for some miracle that the expert returns go
through the roof, or Adrian says my mistake and I'll
start cutting left, right, and center.

Speaker 2 (01:29):
Now.

Speaker 1 (01:29):
I don't see either thing like that happening to you.

Speaker 2 (01:32):
Yeah, I mean, I think the most likely catalyst will
be on the interest rate side. Once we get I guess,
some convincing evidence that inflation pressures are coming down and
staying down where they should be, then there'll be room
for interest rate relief. And it's really just a question
of when that happens. I mean, we're kind of talking
early next year for the first cuts reserve banks trying
to put out a signal of something even later into

(01:54):
next year. But I do think there's probably an issue
of there are a lot of people that thought would
be having them now and they haven't happened, and you know,
they haven't really planned to that.

Speaker 1 (02:05):
What's the level of pain that you're really seeing that
the headlines will tell us people are screaming, doors are closing,
wallets are shut. Adrian goes, Oh, this is all going
to plan. What's the real story?

Speaker 2 (02:17):
Yeah, I mean, I think this is the reality of
what it's like to live through a recession from day
to day. I think it's we easily forget that and
we see it as a few points on a chart
in history, but actually living through it, you do get
these kind of stories. I mean, I think the best
gauge of where we are, where the economy is right now,
I always synthesize, is it's really down employment rates. So

(02:38):
whereas it now four point three percent, that's not terribly high.
In fact, there's probably one of the lower rates we've
head in history. But it is rising and you know,
no one thinks it's going to stop here. We're expecting
that to peak at about five and a half percent.

Speaker 1 (02:51):
Miche you appreciate it very much, and good luck with
your forecast Westpac. Seeing your economist Michael Gordon with us
ten minutes past seven. For more from the mic Hosking
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