Mitch Chase

[Ryan Dally @Ryandally08]

The RBA now has two options: crash the economy or live with stagflation.

GDP is out: +0.4% in the June quarter, +2.1% through the year.

That’s stronger than HSBC’s 0.1% scare number, and stronger than the 0.2–0.3% consensus, but it is not a healthy economy.

It’s an economy running into its speed limit because productivity has collapsed.

HSBC’s Paul Bloxham nailed the bind the RBA is in:

“They cannot keep near-full employment and get inflation back to 2-3%”

Growth is weak. Inflation is still too high, headline 3.5%, trimmed mean stuck at 3.6%.

The only way inflation comes down from here is if the economy stays weak for a long time.

That’s the choice: grind toward recession, or sit in stagflation.

The RBA already warned labour productivity fell 0.5% year on year in Q2.

Every hour worked this year produced less than last year.

Jim Chalmers is out claiming the government is “actioning three productivity reforms a week” after last year’s roundtable.

If that’s true, why is output per hour going backwards?

You don’t get more jobs and less output and call it success. That’s the opposite of prosperity.

Weak productivity equals a low speed limit.

A low speed limit equals sticky inflation equals the RBA has no easy options left.

Rates stay high. Housing stays under pressure. Households stay cautious. And Canberra keeps talking about “ambitious agendas” while the numbers show we’re producing less with more people.

This is the bill for years of weak reform, high migration, and governments that treat productivity as a press release.

Albo and Chalmers just do not care.

[Mitch Chase @chase9_mitch]

@SenatorWong I stand with majority of Danes who are protecting their children.

How about you go spend a month in Saudi Arabia? Let me know how they treat you there.

[Mitch Chase @chase9_mitch]

@DoritosUK @VancityReynolds Nice