Economists are growing more certain with every new data release that next Wednesday’s national accounts will confirm that the economy has been in recession since late last year.

But they say this won’t be an automatic trigger for another interest rate cut next week.

Data released on Thursday showed business investment dropped by its biggest margin in nearly 20 years during the first three months of 2009, while future spending plans have been cut back as the economic downturn takes holds.

The downturn in growth comes despite the federal government’s efforts to sure up the economy through household spending.
Full Story

The federal government should have taken a tougher approach to its second budget, economists say.

NAB chief economist Rob Henderson said the government should have been more prudent in the budget delivered by Treasurer Wayne Swan on Tuesday.

The government has forecast an underlying cash deficit of $57.59 billion in 2009/10, or 4.9 per cent of gross domestic product (GDP), following a deficit of $32.11 billion in 2008/09.

In Treasury forecasts, the government expects the budget to return to surplus in 2015/16.

“We were looking for a tough budget,” Mr Henderson said.
Full Story