Three forces are bearing down fast on the Aussie economy. If they converge, interest rates look set to drop to an extreme degree.
The hawks are dead.
It looks as though Reserve Bank of Australia will cut interest rates soon.
The trigger will be rising unemployment:
The debate now turns to how far rates will fall.
Australia has been mired in per capita recession since the Albanese Government came to power.
This is profoundly deflationary so it’s likely that we will see substantial easing over the next 18 months, in the order of six to eight cash rate cuts.
The long-term outlook is terrifying
However, the longer term presents a more significant challenge to monetary policy.
Three forces are bearing down fast on the Aussie economy. If they converge, today’s rising unemployment will become a structural spike.
1. The first is Peak China. We know that the Chinese economy is undergoing immense structural change away from those areas that have supported Australian bulk commodities.
Australia’s income shock will be huge, with an iron ore and coking crash compared to pre-China boom prices.
Nobody got a pay rise for the better part of a decade the last time we saw that happen.
2. The second is Peak Human. Artificial intelligence is evolving at a stunning speed and is already hollowing out jobs in media and IT.
Soon, many white-collar jobs in Australia will become little more than modules bolted onto an AI spine in Palo Alto. It cannot be stopped.
Unemployment is already rising and AI will accelerate that. Picture: Damian Shaw
3. The third is Peak Fat. New obesity drugs are about to roll out worldwide. The health benefits for society will be enormous. One such outcome will be a much fitter labour force with fewer days off and rising participation.
More here: https://www.news.com.au/finance/eco...y/news-story/b2e4d020f17a4f45dc9c63713e036bc9
The hawks are dead.
It looks as though Reserve Bank of Australia will cut interest rates soon.
The trigger will be rising unemployment:
The debate now turns to how far rates will fall.
Australia has been mired in per capita recession since the Albanese Government came to power.
This is profoundly deflationary so it’s likely that we will see substantial easing over the next 18 months, in the order of six to eight cash rate cuts.
The long-term outlook is terrifying
However, the longer term presents a more significant challenge to monetary policy.
Three forces are bearing down fast on the Aussie economy. If they converge, today’s rising unemployment will become a structural spike.
1. The first is Peak China. We know that the Chinese economy is undergoing immense structural change away from those areas that have supported Australian bulk commodities.
Australia’s income shock will be huge, with an iron ore and coking crash compared to pre-China boom prices.
Nobody got a pay rise for the better part of a decade the last time we saw that happen.
2. The second is Peak Human. Artificial intelligence is evolving at a stunning speed and is already hollowing out jobs in media and IT.
Soon, many white-collar jobs in Australia will become little more than modules bolted onto an AI spine in Palo Alto. It cannot be stopped.
Unemployment is already rising and AI will accelerate that. Picture: Damian Shaw
3. The third is Peak Fat. New obesity drugs are about to roll out worldwide. The health benefits for society will be enormous. One such outcome will be a much fitter labour force with fewer days off and rising participation.
More here: https://www.news.com.au/finance/eco...y/news-story/b2e4d020f17a4f45dc9c63713e036bc9
