David Plank

ANZ-observed spending in the first week of 2023 was 4% lower than the first week of 2022, despite prices rising close to 8% in 2022 according to our CPI forecast. Households also spent less on key trading days in 2022 compared to 2020 and 2021. @AdelaideTimbrel

It's easy to attribute any data blip to the much anticipated Spending Slowdown. But the evidence is mounting. ANZ Consumer Confidence shows people have been worried for some time, pent up demand for travel could be waning, while inflation and interest rate pressures intensify.

@TheKouk Tobin’s Q doing its thing.

With home building costs up 20%+ in the last 18 months or so & selling prices down 8% in the past 8 months, the equation for property developers is turning sour. Very sour. Could present a problem of limited new supply coming on tap just when popualtion growth is lifting sharply

@PPGMacro @AvidCommentator @ANZ_Research @madelinedunk Value

@AvidCommentator @ANZ_Research @madelinedunk @DavidPlank12 are they measuring by volume or value?

Australian shoppers embraced Black Friday sales. This has helped boost ANZ-observed spending in November. #ausecon #retail #ausbiz @madelinedunk @DavidPlank12

@AvidCommentator @ANZ_Research @madelinedunk People are switching spending to services and away from goods. It was a clear part of the Q3 GDP data. Hence shopping is doing less well than total spending. A reversal of the Covid impact.

@ANZ_Research @madelinedunk @DavidPlank12 This chart has been doing the rounds and I'm trying to understand it within the context of the previous tweet. Any ideas how we ended up with two seemingly divergent results? Thanks

@Nixon_Gill @ANZ_Research Lot of very unusual shocks to headline inflation this year.

@DavidPlank12 @ANZ_Research So inflation to drop from 8 to below 4 in a year. Has that happened before historically?

Australia and New Zealand have similar inflation rates, but we expect the RBA cash rate to peak at 3.85% vs the RBNZ OCR at 5.75%. Structural factors and the central banks’ views on economic trade-offs, wages, inflation expectations and neutral rates are key differentials.

@Nixon_Gill @ANZ_Research There are a lot of one-offs that have boosted headline inflation. As these drop out we expect the headline rate to fall below 4% through next year. So the cash rate will be above inflation on our forecasts. We then think interest rates will need to stay elevated for a while.

@ANZ_Research @DavidPlank12 Can you explain why official rates won’t need to be as high this time to bring down inflation? Historically they need to be ahead of CPI to reduce it, that or a ripper recession to crush it.

Policy outlooks for the RBA and RBNZ have diverged, despite seemingly similar inflation problems. We take a look at why. bit.ly/ANZ-Insight-RB…

Sydney housing prices have led the fall in Aus housing prices, but other capitals are following suit. We expect a peak-to-trough decline of 18%. #ausecon #housing @felicity_emmett @AdelaideTimbrel

Spending on Black Friday was up this year compared to 2019. No doubt inflation has contributed to that but we see decent momentum pre and post Black Friday as well. November is shaping up as a bounce in retail compared to October.

ANZ-Roy Morgan Aus Consumer Confidence rose 1.8% (5.6% over the past three weeks) to its highest since early October. But it is still very weak. ‘Financial situation compared to a year ago’ up 9% and ‘Financial situation next year’ up 2.8% drove the rise. #ausecon @DavidPlank12

@aus_econ The facts always change, which makes forecasting a touch gig. To be fair we did say at the start of the year the cash rate was going above 3%. What has shifted is the timing. And now we are thinking maybe it needs to be 4%+

@DavidPlank12 How come all the banks have been so bad at this and keep making revisions? Rba, big banks, everyone is getting it wrong constantly. Seems odd

The Q4 WPI due in mid February is shaping up as a very critical data point. If it indicates wages growth is picking up sharply then a 4%+ cash rate may be needed.

More and more the data on inflation and wages suggest Australia is lagging global trends rather than following a different path.

International visitors are coming back to Australia, but a lack of arrivals from China is slowing the recovery. Arrivals from India are almost back at pre-COVID levels, and we think there’s lots of upside for the Indian tourist market. #ausecon @madelinedunk @felicity_emmett

Finally some respite from the relentless fall in confidence. But sentiment is still effectively at "recessionary" levels. So far this hasn't translated into a pullback in spending. Whether this disconnect continues is a key issue for the outlook and monetary policy.

@TheKouk That's what having a current account surplus can do!

Feckless economists are asking today, why has the AUD risen 5% against the USD in the past few weeks when Australia's interest rates are below those of the US?

Can’t stop won’t stop

Inflation expectations have surged in recent weeks. This has also driven consumer confidence lower. Which makes for a tough backdrop for RBA policy considerations.