1. Don’t bet US has to go into recession

Goldman Sachs economists are thinking that a soft landing for the US economy is a chance! CNBC reports that “In a pair of client notes filed Sunday, the Wall Street firm pinned its case on two pillars — that the labor market is beginning to come back into balance between supply and demand, and that wage growth is cooling enough in two key sectors to suggest that a wage-price spiral can be thwarted.”Goldman Sachs said recent data on inflation and from the labor market point to the possibility that while growth will be anaemic through 2023, the worst-case scenario can be avoided.

Retail trade and accommodation services are looking resilient enough to help the economy avoid a recession. Of course, Goldman Sachs is not emphatic that a recession will be avoided but they see it as a reasonable chance.

2. Budget Deficit to improve before worsening

Tonight Treasurer Jim Chalmers will talk about a $42 billion improvement in the Budget’s bottom line over four years, but the AFR says that will happen mainly this year. After that, Treasury boffins think the deficit grows big time. “Over the next three years, the deficits are expected to be similar to those forecast in March, due to the spiralling costs of the National Disability Insurance Scheme and debt interest payments, as well as $33 billion more in indexed welfare payments, due to high inflation,” Phil Coorey writes.

3. NSW wants a bigger share of the GST

The Daily Tele says NSW Treasurer Matt Kean thinks NSW faces being “short changed” after carrying the nation during the Covid-19 pandemic, with the state facing a $2 billion black hole if the federal government doesn’t carve up the federal GST pie more fairly.

Kean looks at the costs imposed on NSW and says it’s time for payback. Kean cited the fact that the vast majority of returned travellers, who went into hotel quarantine, did it in NSW and extending support payments to businesses across the nation’s most populous state, all added to the State’s overall pandemic-related spending. The Tele says: “Analysis by NSW Treasury of the Commonwealth Grants Commission figures shows the estimated impact of Covid-19 on NSW has been understated by $715 million a year – adding up to more than $2 billion over the next three years.”

4. No Boris as Sunak set to lead the UK

The BBC reports that Rishi Sunak will be the UK's next Prime Minister after winning the Conservative Party leadership contest. No. 10 says Sunak will formally take over as PM tomorrow morning after meeting King Charles, and will give a statement at around 11.35am. That will follow a final cabinet meeting chaired by outgoing PM Liz Truss at 9am, and a statement from her at around 10.15. In a brief address earlier, Sunak warned the country faced “profound economic challenges”. The FTSE Index for the UK stock markets rose 44 points on the news.

5. Housing supply to surge in Budget

The SMH reveals that a scheme to build one million new houses will be unveiled in Treasurer Jim Chalmers’ first budget in a historic accord between the federal government, the states and private investors, including the superannuation sector. “Chalmers will use the budget to outline the government’s plans to bring together states and the investment community to increase housing supply with a particular focus on new affordable homes,” Shane Wright and Rachel Clun report today. This is a huge story for an economy too short of housing!