From the AFR. Hat's off to Matt Johnson in particular. Matt has strong views, but, like his mentor Rory Robertson, he is very intellectually honest. (Nobody is more straight than Rory, though.) Economists who work very closely with traders tend to be--they cannot afford to cling to an empirically-invalidated hypothesis. Like Bill Evans and Tim Toohey, Matt has also been exceptionally good at catching the European waves early. Without carrying on--because he does like giving me a whack on occasion!!--Matt also does the best empirical research of any publishing market economist I know, save perhaps Kieran Davies (who I would put on a level-pegging). Kieran, where art thou?
MICHAEL BLYTHE, CHIEF ECONOMIST, CBA
"It is consistent with the GDP numbers yesterday. The economy is probably in better shape than we are all willing to admit. It does seem an extraordinary set of numbers. The trend seems to be that we are generating just enough jobs to keep the unemployment rate around that 5 percent figure which is what most economists think of as full employment.
All these competing forces at work in the economy are balancing out in terms of what it means for the labour market. You can say there is a fair amount of momentum in the economy and that's a pretty handy protection against whatever the world may throw against us in the next few months."
MATTHEW JOHNSON, SENIOR ECONOMIST, UBS
"It looks like we've all got the economy wrong. Q1 GDP data showed the economy was growing above trend, while jobs data suggests it is growing around trend. The domestic case for further easing has disappeared and if they do ease further, it will be after they see weaker data or after a big drop in global demand.
The outlook for rates? The risk is for no rate cut at all but my guess is that the economy will continue to soften. The data is pointing in the opposite direction just now. We still forecast a 25 basis point-cut in Q3 but it's under pressure. We do need to see further softening."
