Federal Treasury, Head of Global Strategy TD London, Advisor to PM, punter. Speaker. MD Market Economics.
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My 2026 forecasts:
GDP H1 lifts to 2.5%; sub 2.0% in H2
Unemployment rate to 5%
Inflation eases 2.0 to 2.25%
Wages growth soggy at 3%
RBA cuts to 3.10%
10 yr bonds 4.00%
AUD lifts to 75 c
House prices – no change, downside risks
ASX200 – below 8,000
piped.video/watch?v=u6007K2J…
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Grand final day:
A shout out to Carlton fans... that's 31 years without a premiership.
How sweet it is!
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I make that at least 5 recessions forecast by Chris, none of which have happened.
I am sure it gets the clicks
AI boom could end in nasty global recession afr.com/markets/equity-marke…
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One of the issues when Chalmers inherited a govt debt explosion.
The good news is that the containment of that debt rise in recent years has seen net interest payments on that debt fall to 0.6% of GDP in 2026-27, lower than every year of the Abbott, Turnbull & Morrison governments
Chalmers to spend more on debt than Medicare afr.com/policy/economy/chalm…
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ICYMI
The ONS in the UK found they were not measuring productivity correctly. The correction of the error has dramatically changed the productivity story in the UK.
Could the ABS be making the same mistake in Australia?
“Today, I don't feel like doin' anything
I just wanna lay in my bed
Don't feel like pickin' up my phone
So leave a message at the tone
'Cause today, I swear, I'm not doin' anything, uh”
Bruno Mars
Like Australia, economists & policy makers in the UK have been agonising over the slump in productivity growth over the past 15 years.
It turns out that the ONS (akin to the ABS) was measuring hours worked incorrectly. They assumed they were higher than they actually were, meaning weak productivity – less growth in output per hour worked.
Revisions to the UK history saw average annual productivity growth revised from 0.7% in the last 15 years to a highly respectable 1.3%.
Could it be the case the ABS has made similar errors in the labour force data & that hours worked per worker have fallen by more than the ABS assume?
If so, Australia’s productivity problem will turn out to be a storm in a champagne flute and all that agonising over productivity pretty much a waste of time.
piped.video/watch?v=V1DMt16-…
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Gross govt debt falls to $980.6 billion.
The govt will borrow $6.0 billion next week - no maturities.
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“Today, I don't feel like doin' anything
I just wanna lay in my bed
Don't feel like pickin' up my phone
So leave a message at the tone
'Cause today, I swear, I'm not doin' anything, uh”
Bruno Mars
Like Australia, economists & policy makers in the UK have been agonising over the slump in productivity growth over the past 15 years.
It turns out that the ONS (akin to the ABS) was measuring hours worked incorrectly. They assumed they were higher than they actually were, meaning weak productivity – less growth in output per hour worked.
Revisions to the UK history saw average annual productivity growth revised from 0.7% in the last 15 years to a highly respectable 1.3%.
Could it be the case the ABS has made similar errors in the labour force data & that hours worked per worker have fallen by more than the ABS assume?
If so, Australia’s productivity problem will turn out to be a storm in a champagne flute and all that agonising over productivity pretty much a waste of time.
piped.video/watch?v=V1DMt16-…
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Yesterday's unemployment data dovetail with the slump in house prices.
As everyone should be aware, unemployment has a huge influence on house price momentum, followed by supply / demand dynamics & then household formation & construction costs.
The current house price momentum is pointing to the next round of labour force data showing yet higher unemployment
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Bond yields hitting fresh cyclical highs.
The pressure on the US to fund an annual budget deficit of US$2trillion & rising, plus refinancing maturing debt, is a big deal.
The US is on the cusp of a classic debt trap - borrowing money just to pay the interest on existing debt
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Oh - The clown class in Australia say the flood of illegal ciggies here is because of the excise... Seems to be permeating Europe too. Amazing reach!
“If you’re in cocaine, sanctions are much higher”: Why criminal gangs are flooding Europe with illegal cigarettes bloomberg.com/news/features/…
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Stephen Koukoulas retweeted
The HILDA chart that puts the lie to the 'cost of living crisis'. Financial stress is perhaps up a little post covid but remains at levels typically below 20 years ago. Roughly we're average since 2001.
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Rippa Rita seems to think you have to have the arse out of your pants to have a conscience & show care for the less well off in society.
Other normal people think it's just common decency
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ICYMI
Today's worrying unemployment data - problems & conflictions for the RBA
“And he wore a hat
And he had a job
And he brought home the bacon
So that no one knew”
Devo
The rise in the unemployment rate is unrelenting – a fresh post-pandemic high of 4.6% was reached in August, up from 4.3% in December 2025, up from 3.9% in January 2024 and up from 3.4% in 2022.
The python like squeeze on the economy from oppressive interest rates is there to see, but as the RBA has alluded to, a further hike next week is likely as it tackles inflation.
Current settings have a 5% unemployment rate pretty much baked in – the worry will be when unemployment exceeds that level and economic growth is sufficiently sluggish to keep it rising.
The case for 2 more hikes from today was always sketchy – it has been smashed with the unemployment result.
piped.video/watch?v=BMYNDKZx…
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Fun fact:
The last time the unemployment rate was 5% for more than 6 months, inflation was 1.5%
I wonder if the RBA are alert to this link?
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Important to note that full employment is part of the RBA mandate.
Some on the monetary policy board will be noting that it is already missing this goal & further hikes will make it worse
All set for a heated meeting next week
“And he wore a hat
And he had a job
And he brought home the bacon
So that no one knew”
Devo
The rise in the unemployment rate is unrelenting – a fresh post-pandemic high of 4.6% was reached in August, up from 4.3% in December 2025, up from 3.9% in January 2024 and up from 3.4% in 2022.
The python like squeeze on the economy from oppressive interest rates is there to see, but as the RBA has alluded to, a further hike next week is likely as it tackles inflation.
Current settings have a 5% unemployment rate pretty much baked in – the worry will be when unemployment exceeds that level and economic growth is sufficiently sluggish to keep it rising.
The case for 2 more hikes from today was always sketchy – it has been smashed with the unemployment result.
piped.video/watch?v=BMYNDKZx…
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“And he wore a hat
And he had a job
And he brought home the bacon
So that no one knew”
Devo
The rise in the unemployment rate is unrelenting – a fresh post-pandemic high of 4.6% was reached in August, up from 4.3% in December 2025, up from 3.9% in January 2024 and up from 3.4% in 2022.
The python like squeeze on the economy from oppressive interest rates is there to see, but as the RBA has alluded to, a further hike next week is likely as it tackles inflation.
Current settings have a 5% unemployment rate pretty much baked in – the worry will be when unemployment exceeds that level and economic growth is sufficiently sluggish to keep it rising.
The case for 2 more hikes from today was always sketchy – it has been smashed with the unemployment result.
piped.video/watch?v=BMYNDKZx…
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Meanwhile...
AUD edging lower - 0.7035
Bond yields keep exploding higher:
3 year 5.10%
10 year 5.41% (although spread to the US now just 27bps)
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Birth rates also correlated to income:
Richer people (women) - with better access to health care, contraceptives & the like - have fewer children than the poor
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A remarkably simple chart showing how the birth rate declines as women's educational attainment rises
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Dave doesn't realise falling birth rates are a global issue, especially in rich countries & especially where there is a high proportion of well educated women
Birth rates falling mainly because the Government you constantly defend are taxing honest working Aussies to the poorhouse to fund corruption and idiocy that make honest working Aussies even poorer.
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