In January and the months before the May election, Treasurer Jim Chalmers told us the economy was strong. However the country’s statistician has come out with growth numbers that indicate in the three months to the end of March, we were in a per capita recession!

Looking at the headlines, it’s hard to believe the economy became stronger over the past three months. June quarter not only had a federal election (these events are never good for spending by business and consumers) plus the world suffered the Donald Trump ‘Liberation Day’ reciprocal tariffs that smashed stock markets and confidence.

Sure, while you could say we’ve had rate cuts, we’re seeing interest rate rises have taken time to work on inflation and now economic growth, which did come in at a low 0.2% in the March quarter.

That means the annual number was only 1.2%, which together indicates Dr Chalmers was wrong about how strong the economy has been. However, it’s not all bad news, as this growth number (that actually tells us that we’re in a per capita recession) escalates the chances of a rate cut next month on July 8.

AMP deputy chief economist Diana Mousina is one expert who has changed her view on when the next rate cut comes. “We had been expecting another 0.25 per cent rate cut at the August, November and February board meetings but now expect another 0.25 per cent cut in July,” she said. “This means that the cash rate is likely to end up around 2.85 per cent at the end of the rate cutting cycle.”

News.com.au talked to Betashares chief economist David Bassanese, who said the weak GDP numbers added to the case for back-to-back rate cuts. He pointed to underlying inflation still being on the high part of the 2-3% band the RBA targets and that financial markets are less scared about Donald Trump’s tariffs, so the central bank could gamble and wait until August.

He thinks the RBA will wait until June quarter inflation figures that are out at the end of July, which should make an August rate cut very likely.

While Bassanese is a smart economist, he can be a little too cautious (like a lot of good economists are) but I’d point to the RBA’s chief economist, Sarah Hunter, who gave a speech this week and surprised me how cautiously negative she was about the threats to the economy, which made me think that maybe a rate cut was closer than I was thinking.

If you want to see why we might need another rate cut in July, given we suffered 13 rate hikes from early 2022, check out this ABS look at growth shown in the Daily Telegraph today.

It’s a shocker and shows that the Treasurer was ‘gilding the lily’ when he said the economy was strong. The one excuse he had for believing that was the fact that unemployment hasn’t gone sky high at 4.1%, which is an internationally significant achievement. By the way, this actuality has held the RBA back from cutting rates the way other central banks around the world have.

Interestingly, one of the causes for this lower-than-expected 0.2% growth, when economists expected a 0.4% figure, was less government spending in the March quarter. And it should be made clear that the Government would never have had such good unemployment statistics if it hadn’t hired so many public servants over the past three years.

The ABC and Budget papers have revealed that “The Albanese government removed the cap on federal government employees in 2022. Average staffing levels have increased by 20% since then.” So, there was a method in Dr Jim’s madness to employ more public servants and you can bet Peter Dutton didn’t get one vote from anyone in that sector at the May election!

While my best bet is that the RBA should cut in July, it could be convinced to wait until August for the June inflation numbers. If they do, it would be a mistake, but as former PM Paul Keating has said a few times: “As history has shown, when a real crisis is upon us, the RBA is ­invariably late to the party”.