We've had a double dip recession, says Deutsche Bank economist

Deutsche Bank chief economist Darren Gibbs estimates the economy grew just 0.1 per cent in 2010. Photo / Doug Sherring

Weak jobs data have convinced Deutsche Bank chief economist Darren Gibbs the economy contracted 0.4 per cent in the December quarter, which on top of September's 0.2 per cent decline would constitute a double-dip recession.

Coming on top of "appalling" building consents figures, disappointing retail sales and trade numbers, and Tuesday's payrolls data which also recorded declining employment, yesterday's worse-than-expected household labour force survey made it hard to forecast even a small positive for fourth-quarter gross domestic product, he said.

Gibbs estimates the economy grew just 0.1 per cent in 2010. To recover the ground lost in the 2008-09 recession it needs to be growing much faster than its trend rate.

"But we are not getting above-trend growth. We are not getting trend growth. We are not getting any growth."

While Gibbs is optimistic that 2011 will be a much better year, with hindsight the Reserve Bank's official cash rate increases in the middle of last year were a mistake which it should now consider reversing, he said.

A floating mortgage rate around 6.5 per cent was low by historical standards, but clearly people did not see it as a bargain rate.