Economists are warning that NZ may have to downgrade its economic outlook as a result of Donald Trump’s re-election.
Analysts from BMI have revised down our growth forecast from 2% to 1.8% for next year.
Infometrics Principal Economist Brad Olsen tells Heather du Plessis-Allan it is not just the proposed tariffs that are causing the outlook.
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Speaker 1 (00:00):
Economists are warning that we may have to downgrade our
economic outlook as a result of Donald Trump's election because
analysts from BMI, which is part of Pitch Reckon, we're
going to lose ten percent of growth two percent growth
down to one point eight percent next year. Brad Olson
is in for Metrics Principal economis and with US Now.
Hello Brad, Hello, nice to have you in the studio.
Thank you for coming in. Brad. Is this based entirely
(00:22):
on the prospect of him doing the tariffs.
Speaker 2 (00:24):
I don't think it's just the tariffs. The tariffs do
make a bigger part, and certainly longer term. I think
we're almost more worrying because if the US puts on
the tariffs, doesn't buy as much mo overseas, there's not
as much need for overseas to produce stuff. Therefore there's
not as many manufacturing jobs overseas and they don't have
money that they then spend on our stuff. But I
think also importantly, if Trump then comes through with some
(00:46):
of the tax cuts in that that he wants to
bring through, most expectations from US economists is that that
would be inflationary. Therefore next year there's not as much
need for the Federal Reserve to cut interest rates back,
so there's not as much economic growth coming forward if
that's the case, if interest rates have to stay higher.
So I think it's a combination of the tariffs but
also of his other economic policies that would almost drive
(01:09):
too much short term economic growth in the US, which
would cause an inflation to be higher, and then interest rates.
Speaker 1 (01:14):
And then how much of it also, I mean, because
he's really he I mean, he is intending to make
life very difficult for China. Right, how much of this
is squeezing China's economy, which we're reliant on.
Speaker 2 (01:23):
Yeah, I mean that's a big enough part of it,
particularly when the Chinese economy is not doing great to
start with, right. But I think also interesting, I mean,
the question for me is how quickly does this come through?
And it's been fascinating the last day or so looking
at some of Trump's cabinet picks. He's picked, you know,
the head of the EPA, He's picked someone to run
the border. He's picked by the likely bud sounds of
(01:44):
secretary of State, no Treasury secretary yet or anything like that.
So I do sort of wonder if he's made it
a bit clearer. He wants to do stuff around environmental regulation,
he wants to change border settings and what have you.
He doesn't seem like he wants to go gung ho.
You know, first minute of his presidency will be tariff.
This might be a slightly more delayed impact coming through
on the economy. It might not hit day one.
Speaker 1 (02:05):
I do not believe he's going to do the tariffs.
I just I think the reason being that I think
he says a lot of stuff that is designed. Like
any deal maker, right, you say a lot of stuff
up front, you freak people out, and then you soften
your position, and then you strike the deal. And I
just wonder if the tariffs are that. And I think
because I think that when he thinks it through and realizes,
(02:26):
as has been pointed out to me, how much of
our stuff go as componentry goes into other things, and
what the impact that that's going to have, I don't
think it's going to be a good idea for him.
Speaker 2 (02:34):
Well, but this is the challenge, right, does he believe
that he's going to do it? No one's got that
certainty either way, because I guess the other risk is
that he sort of doesn't do it immediately, everyone drops
their guard and then all of a sudden, bang, he
puts twenty percent tariffs on and so that unexpectedness I
think is causing a little bit, maybe not volatility, just
everyone's questioning at all. And I think also he's been
(02:54):
pretty clear as an incoming president he wants more manufacturing
in the US, and tariff's would do that to a degree.
It would still cost the economy overall, but if he
does want to get some of those blue collar, you know,
manufacturing jobs back, and that could be a way to
do it.
Speaker 1 (03:07):
Bred We're going to talk to retail New Zealand in
about well maybe like fifteen minutes or thereabout. It's about
what they're expecting for the upcoming Christmas season because the
credit can't spending was pretty flat last month. What do
you reckon?
Speaker 2 (03:17):
Well, we got a new card spending today which actually
so sort of a continued flattening off. Maybe a little
bit of a boost coming through in the seasonally adjusted numbers.
It's not enough to sort of call this a Christmas
bonanza yet, but maybe some slightly better news. Those interest
rates staying to have an impact. I think the thing
we'll all be waiting for is those Black Friday sales
that come through some of the cyber Monday stuff like
(03:38):
are people spending or not? Because I keep hearing people
that sort of say, if the special wasn't good enough,
if there's not enough deals going around, I'm still not buying.
So maybe some early signs, but I don't think it's
enough to make for a great Christmas.
Speaker 1 (03:49):
Yeah it doesn't look like it. So have you done
that thing that everybody does where you canbine work with
a Coldplay concert?
Speaker 2 (03:54):
I very much have. I am happy. I've got some
work meetings in the next couple of days, but I've
also got an appointment with coldplatemorrow night with you and
a few other people. By the sound.
Speaker 1 (04:02):
Yeah, I'm going to be there. We're going to be
raging out together, aren't we.
Speaker 2 (04:05):
It's going to be great. You'll be Coldplay fan or
what I am? I mean fix you as my go
to I'm not the most upbeat song in my life,
but maybe that fits with the dismal science of economics
that you know a little bit downbeat every now and then.
But I will try and fix you with the economics overall.
Speaker 1 (04:18):
I'll tell you what, why don't we get Adrian to
listen to fix you instead of what he's trying to
do to the economy.
Speaker 2 (04:23):
I think that a sky full of stars might be
more apped at points.
Speaker 1 (04:26):
Oh jeez, is there a song about trees? Because I
don't believe does identify as one of them.
Speaker 2 (04:31):
The scientist's clocks and otherwise, but yeah, I'm not sure
about trees. Jeez.
Speaker 1 (04:35):
Hey, enjoy the concert and thanks for coming and really
appreciate it. That is Brad Olsen, Infametric's principal economists. For
more from Heather Duplessy Allen Drive, listen live to news talks.
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
Economists are warning that we may have to downgrade our
economic outlook as a result of Donald Trump's election because
analysts from BMI, which is part of Pitch Reckon, we're
going to lose ten percent of growth two percent growth
down to one point eight percent next year. Brad Olson
is in for Metrics Principal economis and with US Now.
Hello Brad, Hello, nice to have you in the studio.
Thank you for coming in. Brad. Is this based entirely
(00:22):
on the prospect of him doing the tariffs.
Speaker 2 (00:24):
I don't think it's just the tariffs. The tariffs do
make a bigger part, and certainly longer term. I think
we're almost more worrying because if the US puts on
the tariffs, doesn't buy as much mo overseas, there's not
as much need for overseas to produce stuff. Therefore there's
not as many manufacturing jobs overseas and they don't have
money that they then spend on our stuff. But I
think also importantly, if Trump then comes through with some
(00:46):
of the tax cuts in that that he wants to
bring through, most expectations from US economists is that that
would be inflationary. Therefore next year there's not as much
need for the Federal Reserve to cut interest rates back,
so there's not as much economic growth coming forward if
that's the case, if interest rates have to stay higher.
So I think it's a combination of the tariffs but
also of his other economic policies that would almost drive
(01:09):
too much short term economic growth in the US, which
would cause an inflation to be higher, and then interest rates.
Speaker 1 (01:14):
And then how much of it also, I mean, because
he's really he I mean, he is intending to make
life very difficult for China. Right, how much of this
is squeezing China's economy, which we're reliant on.
Speaker 2 (01:23):
Yeah, I mean that's a big enough part of it,
particularly when the Chinese economy is not doing great to
start with, right. But I think also interesting, I mean,
the question for me is how quickly does this come through?
And it's been fascinating the last day or so looking
at some of Trump's cabinet picks. He's picked, you know,
the head of the EPA, He's picked someone to run
the border. He's picked by the likely bud sounds of
(01:44):
secretary of State, no Treasury secretary yet or anything like that.
So I do sort of wonder if he's made it
a bit clearer. He wants to do stuff around environmental regulation,
he wants to change border settings and what have you.
He doesn't seem like he wants to go gung ho.
You know, first minute of his presidency will be tariff.
This might be a slightly more delayed impact coming through
on the economy. It might not hit day one.
Speaker 1 (02:05):
I do not believe he's going to do the tariffs.
I just I think the reason being that I think
he says a lot of stuff that is designed. Like
any deal maker, right, you say a lot of stuff
up front, you freak people out, and then you soften
your position, and then you strike the deal. And I
just wonder if the tariffs are that. And I think
because I think that when he thinks it through and realizes,
(02:26):
as has been pointed out to me, how much of
our stuff go as componentry goes into other things, and
what the impact that that's going to have, I don't
think it's going to be a good idea for him.
Speaker 2 (02:34):
Well, but this is the challenge, right, does he believe
that he's going to do it? No one's got that
certainty either way, because I guess the other risk is
that he sort of doesn't do it immediately, everyone drops
their guard and then all of a sudden, bang, he
puts twenty percent tariffs on and so that unexpectedness I
think is causing a little bit, maybe not volatility, just
everyone's questioning at all. And I think also he's been
(02:54):
pretty clear as an incoming president he wants more manufacturing
in the US, and tariff's would do that to a degree.
It would still cost the economy overall, but if he
does want to get some of those blue collar, you know,
manufacturing jobs back, and that could be a way to
do it.
Speaker 1 (03:07):
Bred We're going to talk to retail New Zealand in
about well maybe like fifteen minutes or thereabout. It's about
what they're expecting for the upcoming Christmas season because the
credit can't spending was pretty flat last month. What do
you reckon?
Speaker 2 (03:17):
Well, we got a new card spending today which actually
so sort of a continued flattening off. Maybe a little
bit of a boost coming through in the seasonally adjusted numbers.
It's not enough to sort of call this a Christmas
bonanza yet, but maybe some slightly better news. Those interest
rates staying to have an impact. I think the thing
we'll all be waiting for is those Black Friday sales
that come through some of the cyber Monday stuff like
(03:38):
are people spending or not? Because I keep hearing people
that sort of say, if the special wasn't good enough,
if there's not enough deals going around, I'm still not buying.
So maybe some early signs, but I don't think it's
enough to make for a great Christmas.
Speaker 1 (03:49):
Yeah it doesn't look like it. So have you done
that thing that everybody does where you canbine work with
a Coldplay concert?
Speaker 2 (03:54):
I very much have. I am happy. I've got some
work meetings in the next couple of days, but I've
also got an appointment with coldplatemorrow night with you and
a few other people. By the sound.
Speaker 1 (04:02):
Yeah, I'm going to be there. We're going to be
raging out together, aren't we.
Speaker 2 (04:05):
It's going to be great. You'll be Coldplay fan or
what I am? I mean fix you as my go
to I'm not the most upbeat song in my life,
but maybe that fits with the dismal science of economics
that you know a little bit downbeat every now and then.
But I will try and fix you with the economics overall.
Speaker 1 (04:18):
I'll tell you what, why don't we get Adrian to
listen to fix you instead of what he's trying to
do to the economy.
Speaker 2 (04:23):
I think that a sky full of stars might be
more apped at points.
Speaker 1 (04:26):
Oh jeez, is there a song about trees? Because I
don't believe does identify as one of them.
Speaker 2 (04:31):
The scientist's clocks and otherwise, but yeah, I'm not sure
about trees. Jeez.
Speaker 1 (04:35):
Hey, enjoy the concert and thanks for coming and really
appreciate it. That is Brad Olsen, Infametric's principal economists. For
more from Heather Duplessy Allen Drive, listen live to news talks.
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio.
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