A former economic advisor to Barack Obama has slammed Anthony Albanese for getting his facts very wrong about the American economy.
Australias Prime Minister was asked about the US Federal Reserve cutting interest rates by a super-sized 50 basis points, but got his basic economic facts wrong.
Because the economy is so slow, thats why theyre (the US is) cutting rates, he told ABC Radio National broadcaster Patricia Karvelas on Thursday.
However the U.S. economy is booming compared to Australia, with its gross domestic product growing by 3 per cent in the year to June 2024.
In contrast, Australias economy grew by a meagre 1 per cent during the last financial year, sinking to levels unseen since a recession.
This was the slowest annual growth since 1991 outside of a pandemic, thanks to the Reserve Bank of Australias 13 interest rate rises.
Betsey Stevenson, who was a member of the Obama administrations Council of Economic Advisers, slammed Mr Albanese on X for applying the wrong spin to the U.S. Feds first rate cut in four years.
This signals that he isnt listening to the people around him who know something about the macroeconomy, she said, linking to a story by Daily Mail Australias political editor Peter van Onselen.
Betsey Stevenson, who was a member of the Obama administrations Council of Economic Advisers, slammed Anthony Albanese for getting his facts wrong about the U.S. economy
The Oz economy is a bit too fragile for that kind of negligence (in my humble opinion).
Mr Albanese ignored Karvelas when she pointed out the US economy was growing at a much faster rate than Australias.
The US Federal Reserve has cut its benchmark federal funds rate by 50 basis points to 4.75 per cent to 5 per cent, marking the first cut since March 2020 at the start of the Covid pandemic.
Recent indicators suggest that economic activity has continued to expand at a solid pace, the US Feds accompanying statement said, but adding job gains have slowed.
The US Federal Reserve has joined the European Union, Canada, the UK and New Zealand in cutting rates this year.
Saxo chief macro strategist John J. Hardy said financial markets had only regarded a 50 basis point cut, from the US Fed, as a 60 per cent chance.
So it remains a bit of a dovish surprise, he said.
Treasurer Jim Chalmers also made a loose with the truth comment on Thursday when he wrongly implied financial markets had expected the huge US rate cut.
Prime Minister Anthony Albanese wrongly implied American economic growth was much slower than Australias
The former economic adviser to Barack Obama tweeted a link to Daily Mail Australia political editor Peter van Onselens story
I think what we saw in the US overnight was pretty much expected, he told Nines Today show.
While a rate cut in the U.S was expected, the easing by 50 basis points was not.
Reserve Bank of Australia Governor Michele Bullock this month ruled out any local rate cut by Christmas.
Thats because the Australian inflation rate of 3.8 per cent is much higher than US level of 2.5 per cent and well above the Reserve Bank of Australia’s 2 to 3 per cent target.
But Australias cash rate of 4.35 per cent, while at a 12-year high, is still lower than the equivalent policy rates in the U.S., UK, EU, Canada and New Zealand - something Dr Chalmers got right.
Its really important to remember that rates went up by more in the US than they did in Australia, he said.
Even after this interest rate cut overnight in the US, interest rates are still higher in the US than they are here.
While Australias economic growth is weak, the labour market is still strong with unemployment in August remaining at 4.2 per cent as 47,500 jobs were created.