Yesterday I was thinking about Father’s Day this Sunday. Given the state of the economy, we might help boost our economic activity via a Dad-led spending boom. However, given what the country’s statistician told us about our economy’s growth, any Dad-related spending could be just cream on the cake!

In fact, The Daily Telegraph tells us that major retailers are gearing up for a boost in spending with a special focus on what Dads allegedly like: food and booze!

In fact, because Aussies are already spending, which is boosting the latest economic growth reading for the June quarter rise by a bigger-than-expected 0.6%. That means for the year ending June 30, we grew at 1.8%. And that screams two things.

First up, forget about recessions here in Australia. And second, it means the RBA doesn’t have to do any rate cutting, at least for the moment, with economic growth at the fastest pace in two years.

RBA Governor Michele Bullock can laugh at her critics and think: “I was right. Job done!” However, rate cuts may still be needed down the track.

This is how AMP economist Diana Mousina interpreted the data:

“Today’s data should signal to the RBA that an immediate interest rate cut is not necessary, and we expect the central bank to remain on hold in its September meeting, having just cut the cash rate last month and already reducing interest rates by a total of 75 basis points. But interest rates are still restrictive as the economy is tracking below its potential (which is growth somewhere around 2%) so there is still room to cut the cash rate, especially as the inflation data should continue to track around the mid-point of the RBA’s target.”

AMP’s economics brains trust expects another 25 basis point rate reduction at the November meeting, followed by further reductions in February and May 2026, though that could be a big call if inflation doesn’t come down quickly enough.

Important for those good growth numbers was discretionary spending (or purchases on non-essential items) that increased 1.4%, while essential spending only advanced 0.5%. So, from an economist’s viewpoint, excessive Dad-day spending won’t help the RBA bring rate cuts soon.

So, what are the Australian Retailers Association and Roy Morgan research expecting from Father’s Day spending? Here’s the summary:

1. ANZ expects $614 million will be spent by its cardholders.

2. That’s a 3.45% rise in outlays for this special day. (OK I’m showing my bias here calling it special as I’m a Dad and Grand Dad!)

3. Researchers say food and alcohol will be what Dads will get most.

4. However, gift buying is tipped to fall to 20% of total spending, when it was 36% last year, which reflects many Australians are feeling the cost-of-living pinch.

The fact that the overall economy is doing better than expected but the cost-of-living rises are hurting some Australians, such that they find it hard to buy gifts and instead opt for food and booze offerings on a festive occasion, shows that we do have an economy in two parts.

There’s the ‘haves’, who don’t carry too much debt and are income strong. And then there’s the ‘have nots’, who might be on low incomes paying big rents or are saddled with big mortgages.

While it’s a big plus that our economy is growing (because the last thing the ‘have not’s need is rising unemployment), it does mean interest rate relief is going to be a much longer and slower process. And that will be bad news for anyone with a big mortgage.