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Posted: 2024-02-27 21:04:48

Yes, you read that correctly, but I'm not making it up — that's the view of KPMG's chief economist Brendan Rynne.

He put out a note yesterday that explained how February 29 (and the Gregorian calendar) could help us dodge a technical recession and how the leap year adds $6.6 billion to the first quarter's GDP figures.

So, how could this happen? He posits that it's all because February 29 falls on a Thursday.

"With 2024 being a leap year, we get 29 days in February this year — and this extra day's GDP — which falls in the working week — will add around $6.6bn to the economy for this year's national accounts," he wrote.

"This 1.1% kicker to quarterly GDP should be enough to ensure that the March quarter will not fall into negative territory thereby allowing Australia to skirt the possibility to falling into a technical recession.

"We aren't called the 'Lucky Country' for nothing."

Even though economic activity isn't specifically adjusted or accounted for on a "per day" basis by the ABS, he says we need to for the purpose of this discussion given we get an extra day added to the March quarter.

(A March quarter in a leap year has 91 days, but 90 days in a non-leap year, while June, September and December quarters have 91, 92 and 92 calendar days.)

"Seasonally-adjusted real GDP in the September Quarter 2023 was $607.5bn. This equates to about $6.6bn of GDP per calendar day, and is roughly consistent with average GDP per calendar day since the beginning of 2022," he wrote.

"For the March quarter to hit negative growth territory, conditions in the economy would have to be sufficiently bad that the 'extra day' of GDP would need to fall out of the economy. This is almost impossible.

"So while speculation about negative growth is understandable, the impact of the Gregorian calendar on our national accounts statistical framework means it is less likely to occur."

So while GDP for the December quarter may be negative, we have a bigger problem on our hands if GDP for the March quarter is also negative, even if it is "masked by a statistical anomaly."

"It would mean all hands to the economic pump, with the first push possibly coming from the RBA by reducing the cash rate sooner and faster than currently envisaged," Dr Rynne summarised.

Perhaps we're a lucky country in more ways than one...

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