Jim Chalmers in a speech last week offered the scant encouragement that the economy would be “a bit better” in a year’s time.
asserted
economy → offer → time
Fast forward to Friday morning, and the treasurer revealed that his officials were busy downgrading their forecasts ahead of December’s mid-year budget update to show slower growth and higher unemployment.
asserted
officials → reveal → growth
In other words, things are getting worse, not better.
asserted
things → get → words
Overnight, a broadening Middle East conflict pushed the global benchmark oil price to US$113, and within sight of its April high of nearly US$120.
asserted
conflict → broaden → 120
Motorists are paying 60 cents more for a litre of petrol prices than they were before the US and Israel attacked Iran.
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US → pay → Iran
That’s an extra $36 to fill up a 60-litre tank.
asserted
That → ’ → tank
Do that once a week and a family’s monthly fuel bill is $144 higher than in February.
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bill → do → February
The New York Times overnight reported that the US and Israel have drawn up plans to restart attacks on Iran after the upcoming American midterm elections.
asserted
US → report → elections
Westpac analysts have sketched out an “escalation” scenario for the Middle East conflict where oil climbs towards US$150, echoing warnings from the International Monetary Fund earlier this month.
asserted
oil → sketch → Fund
That worst-case scenario would have huge implications for inflation and interest rates, even as we brace for a potential fifth interest rate hike on 3 November.
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we → have → November
Meanwhile, the one bright spot that has helped paper over many of the cracks in the global economy – the huge spending associated with artificial intelligence –
asserted
that → paper → intelligence
Investors are worried about the huge surge in debt among companies racing to build the infrastructure for an AI future – the trigger for another steep sell-off on Wall Street overnight.
asserted
Investors → worry → Street
Community opposition to the massive datacentre build-out could stall the headlong rush towards an AI future.
uncertain
opposition → stall → future
That is likely a good thing in the longer term, but in the short term is another stress to add to the wall of worries.
asserted
That → add → worries
Rising chatter of a new tech stock bubble is naturally accompanied by talk of an imminent bust.
asserted
chatter → rise → bust
With all this going on, no wonder that the treasurer can only offer the thinnest of gruel for Australians hungry for any evidence of an end to years of disruption, and of wages that can’t keep up with high and rising prices.
asserted
that → go → prices
High inflation, low growth and rising unemployment is a central banker’s “nightmare”, as the Reserve Bank’s Andrew Hauser has said.
asserted
Hauser → rise → ?
It’s also a nightmare for a federal treasurer who is increasingly unpopular and desperate for a win in the court of public opinion.
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who → ’ → opinion
“The pressures on people right now are very substantial and obviously that keeps me awake at night,” Chalmers told Politico.
asserted
Chalmers → keep → Politico
“And there’s a number of reasons for that, some of them are outside our control, and some of them we have some influence over.
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we → ’ → influence
You know, providing some cost-of-living help, managing the budget in a responsible way,” he said.
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he → know → way
“Those are the things that we can do, but in lots of ways we’re hostage as well to decisions taken in DC or Tehran or in Eastern Europe about two wars which are pushing up inflation around the world and weighing on growth around the world.
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which → do → world
”
The high level of government spending is not helping the inflation fight, by any means – something the opposition is keen to point out at every opportunity.
asserted
opposition → help → opportunity
Productivity growth is, if not dead, then resting, and shows no signs of springing back to its perch.
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growth → rest → perch
That means more inflation at lower rates of growth as the economy hits its speed limits sooner.
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economy → mean → limits
But Chalmers is right when he says there’s a lot that is out of the government’s control.
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that → say → control
His options to alleviate voter discontent are limited, which is why he frequently falls back on platitudes and lines to the effect of “you think we have it bad?
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it → alleviate → effect
You should see other economies.”
asserted
You → see → economies
Sure, the government can lower petrol prices through another temporary cut to the fuel excise.
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government → lower → excise
But the billions of dollars that pumps into motorists’ pockets makes it harder for the RBA to bring inflation back under control.
asserted
RBA → pump → control
Labor could go the other way and announce plans for big spending cuts in the December mid-year economic and fiscal outlook.
uncertain
Labor → go → outlook
That would help the central bank’s job, but would drag on an already weak economy and push unemployment higher – would they win any plaudits for that?
asserted
they → help → that
This is Hauser’s “world of hard choices” – a world where the solution to one problem makes the other worse.
asserted
other → make → problem
A world with which Australians are becoming all too familiar.
asserted
Australians → become → which
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