A good summary from UBS today (bottom line--wait for UE):
Q4 GDP was a poor quality print, with well below trend growth in the quarter driven by a sub-trend consumer and a rebound in public spending and inventories (with the production and income sides of the accounts soft as well). Together with downward revisions to Q3 (0.8%, was 1.0%), it means the economy was clearly tracking a sub-trend pace in 2H11. Of course, a pause in the cracking pace of capex in Q3 is hardly a surprise, and even with the economy below trend in the 2H11, private demand was well above trend. But that strength in private demand is predominantly capex with help from a modestly subtrend consumer. In contrast, the public sector, net exports and the housing sector are all on average detracting from 2H11 growth. Non-resource rich states are also well below trend. Given below trend 2H11 growth, this would suggest bias to a drift up in the unemployment rate in 2012 (as we and the RBA forecast...despite improving forward looking hiring intentions). We think it's still hard to see RBA easing (UBSe 'on hold' for 2012) unless the unemployment rate starts rising, given improving global outlook and limited CPI downside (despite no obvious inflation pressue in the GDP accounts)...but today's data opens the door for a cut at some point if the unemployment rate does start to rise.
