It can also hold its altitude on only one engine. Like the post-GFC period when mining boomed and house prices fell. Or, the reverse, during the mining bust of 2015 when house prices launched.
The first jet to flame out is households. Delta lockdowns have hammered confidence and spending. Business is slowing fast and future investment plans are being shelved.Source:Supplied The second jet to flame out is our huge commodity price gains. China launched out of the Covid-19 lockdowns with huge commodity demand but is now slowing very fast. Iron ore is tumbling and coal is next:As our two economic motors sputter, unemployment will begin to rise, wages will weaken and inflation will disappear.First, governments can spend more – and they will.
That will mean the second throttle, the RBA, will have to carry more of the load. Australia will need a lower currency to help offset collapsing export income so the RBA will be forced to increase its money printing and bond purchases as a matter of course.
What a shallow and flimsy economy
Given house prices are 28% higher in the ACT than they were 15 months ago, you will have to excuse me for being completely unmoved by the thought of them correcting by a few percent
Good, perfect time to ban iron ore sales to China, It is easy to win a trade war.😎😎