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It’s been a wild and unpredictable couple of years for the Australian economy. A mixture of government stimulus, geography, luck and high vaccine uptake meant that our economy managed to withstand some of the more dire predictions throughout 2020 and 2021. 

But now we’re facing new challenges. Unless you’ve been living under a rock, you’d know that the Reserve Bank has been rapidly increasing the cash rate every month in an effort to stem wildly ballooning inflation. The stock market has been volatile too. The ASX lost 7.5 per cent in the month of September; as this ABC article highlights.

What’s happening in the US?

Meanwhile things are even more dramatic overseas. The US Federal Reserve has been increasing rates at an even quicker pace than our Reserve Bank. The US’ last three rate rises have been a whopping 0.75% (versus 0.50% here) and there are fears that this could bring about a recession. Chair of the US Federal Reserve Jerome Powell has actually said he’s prepared to risk a recession in order to drive inflation down.

But a recession is far from a foregone conclusion for Australia, even if it happens in the US or other countries. This piece from The Guardian last week suggests that the key will be for our Reserve Bank to pump the brakes on interest rate increases right at the point when it believes the US is about to enter recession. 

Stay Positive 

Economics is complex. There are, of course, tangible things affecting the current inflation situation (for example – supply chain shortages against a backdrop of increased demand). But in terms of the forward outlook – there are intangible psychological factors we need to be mindful of, because economics can be a self-fulfilling prophecy. Perception can lead to reality. In other words, it’s good to avoid “doom and gloom” thinking if we can. If consumer sentiment becomes too negative, it will help contribute towards driving a recession in Australia, even if other factors are favourable.

What About the Job Market?

The unemployment rate remains very low. Job ads are still booming, but the exorbitant salary offers are starting to cool off. If you’re a jobseeker at the moment, it’s good to be mindful of this. Don’t be greedy – look for the job you’re most enthusiastic about and be as reasonable as you can about salary expectations.

Remuneration is important – it’s important to know your worth and be ambitious about your wage (especially with inflation running rampant!), but at the same time – the most important thing is what the day-to-day of the job actually entails and whether or not you are going to be happy doing it.