Dismal Science Podcast

Join the AICD’s Chief Economist Mark Thirlwell GAICD for this weekly deep dive into all the economic news. From interest rates to trade wars and everything in between, we have you covered. Stay up-to-date on the economic forces shaping Australia and the world.

215 - Special - 2024 Wrap Up: A Year of Living Conservatively Ft. Su-Lin Ong

This week we are joined by Su-Lin Ong, Managing Director, Chief Economist & Senior Corporate Relationship Manager of RBC Capital Markets. Together Mark and Su-lin reflect on Australia’s economic conditions and the RBA’s 2024 performance.They unpack why the RBA has held interest rates steady for so long – and what this means for Australia’s economic outlook, including a (mild) disagreement on the outlook for interest rates. Plus, they discuss the impact of a new US administration, the RBC's unique projections, the global easing cycle, and how Australia stacks up against the rest of the world.

214 - February Rate Cut Back On The Table?

The RBA keeps interest rates on hold, but the big news is a change in tone that suggests Mark's long predicted February rate cut is back on the table.Also, Mark looks back at his predictions from a year ago, revisiting his forecasts for inflation, unemployment, and economic growth.

213 - GDP Growth Stumbles, Per Capita Recession Deepens, Will the RBA Hold Firm?

This week, we examine Australia's latest soft GDP figures. The headline number is a weak 0.3% quarterly expansion, the lowest rate of annual growth since the pandemic with private sector demand contributing nothing to this meager growth figure. Will the RBA stay the course with rates on hold in the face of a deepening per capita recession and falling living standards? We also look at what's driving Australia's poor economic performance relative to other OECD nations.

212 - Is Germany Kaput? Lessons for Australia in a Deglobalising World

This week, the Dismal Science turns its attention to Europe’s economic powerhouse - Germany. We examine the country's recent economic struggles, exploring the reasons behind its faltering performance, including the war in Ukraine, rising energy costs, and the rise of Chinese manufacturing. We discuss whether these challenges are merely cyclical or point to deeper structural issues with the German economic model. With a shrinking workforce, rising fiscal pressures, and declining global trade, is “Germanification” a cautionary tale for other advanced economies, including Australia?

We also examine the impact of China's growing dominance in key industries, particularly the automotive sector, where Chinese companies are now leading the world in EV production. Can Germany adapt and compete, or is its era of economic dominance over?

211 - Rate Cut Prediction on Life Support? Labor Market Holds Strong & COP29 Gets Political

This week on the Dismal Science, Mark and Raph take a look at the latest Australian labor market figures and what it means for Mark's increasingly shaky call for a February rate cut. Is the RBA being too pessimistic about what the unemployment rate associated with full employment needs to be?

Plus, the Dismal Science takes a metaphorical visit to Baku for COP 29 and finds “upside-down geopolitics” at play. And will President Trump’s reelection derail the action items out of COP29?

Join Mark and Raph to unpack the potential economic implications of the US election result.

We examine some of the key economic policy pledges of Donald Trump that were made during the campaign, from tariffs to taxes, and discuss the possible ramifications for interest rates, inflation, growth, and other economic variables. President Elect President Trump's proposals could send US average tariff rates to their highest level since the 1934 Great Depression. What would this mean for inflation, the US dollar, and the global economy?

We also explore the potential impact of tax cuts and deregulation on growth and profits, as well as the implications for the Federal Reserve and US debt and deficits. And is this a sign of a broader global shift away from neoliberalism? Tune in to find out.

Read more from Mark on the AICD website: AICD’s Chief Economist: Mark Thirlwell GAICD - AICD

Send feedback to: podcasts@aicd.com.au

210 - Wage Growth Slows, Consumer Sentiment Lifts...but for How Long?

This week on The Dismal Science, we examine the latest economic data releases, including wage growth figures, consumer and business sentiment surveys, and the AICD's Director Sentiment Index. The Wage Price Index showed annual growth slowing to 3.5%, a welcome development for the RBA in its fight against inflation. But with productivity growth stalling, will this be enough to see interest rate cuts in the near future?

Consumer sentiment surged in November, reaching its highest level since the first half of 2022, fuelled by optimism about the interest rate outlook and a strong labor market. However, this optimism was tempered by the results of the US election, with sentiment declining sharply following the outcome. Businesses also reported improved confidence in October, but the AICD's survey of directors painted a much bleaker picture, with concerns about inflation, interest rates, and a looming recession weighing heavily on sentiment. Will the recent positive economic data prove to be a fleeting reprieve, or are we finally turning a corner?

Read more from Mark on the AICD website: AICD’s Chief Economist: Mark Thirlwell GAICD - AICD

209 - US Election Volatility! Plus the RBA Holds, But For How Long?

The big news this week is the US presidential election. Markets are reacting in real time as results come in - we look at the volatility and what it means for Australia. Closer to home, the Reserve Bank of Australia (RBA) left interest rates unchanged for the eighth consecutive month. We examine the RBA's latest forecasts, which suggest a slightly softer economic outlook than previously predicted, with lower GDP growth, higher unemployment and slower inflation. But is this bad or good when it comes to taming inflation? Mark explains why this could actually be good news for those hoping for an interest rate cut.

Also on the agenda: the role of government spending in keeping the economy afloat, and whether now is the time for businesses to start investing.

208 - Inflation Cools, But Services Stay Hot. Will Rate Cuts Come Sooner?

This week we look at the latest Australian inflation figures.

The September quarter CPI figures came in slightly better than expected, with the headline numbers showing a decrease in inflation. This was largely driven by government rebates and falling fuel prices. However, services inflation remains stubbornly high. Additionally, some commentators are suggesting a December rate cut is possible...will Mark hold firm to his February prediction?

207 - IMF says "Mission Accomplished"? Bumper jobs numbers, and revisiting Mark's prediction....

Today we have an in-depth look at the IMF's latest World Economic Outlook report, before returning home to dissect the bumper jobs numbers and latest consumer confidence numbers.

In brief, it was an optimistic outlook from the IMF, begging the question, is central bank credibility back? With that said, champagne flutes should remain in the fridge, as there are still a litany of risks to the global economy identified, and suggestions put forward for both governments and bureaucrats - but how likely are they to happen? And then we revisit Mark's February prediction of our first rate cut in light of huge jobs numbers, and increasing consumer sentiment.

206 - Oil price swings, China stimulus fallout, RBA minutes, and consumer confidence.

Join Mark and Raph to discuss the recent volatility in oil prices, driven by factors including the Israel-Iran conflict and speculation about Chinese stimulus measures. We then unpack the latest RBA minutes, analysing the central bank's current thinking on interest rates and its assessment of the economic outlook. Have they made a dovish turn?

Finally, we take a look at the latest consumer and business confidence figures. Are Australians feeling more optimistic about the economy? Well, as usual these days, the story is mixed...

205 - Housing is cooling, back to back surpluses, we're still unproductive, and the complexities of oil pricing.

Much to discuss on the agenda today. We unpack recent housing data, exploring the slowdown in price and rent growth alongside lagging approvals. Retail sales showed strength - but the RBA and other analysts disagree on why. Were they impacted by the weather, stage 3 tax cuts, or an early father's day? Mark will be the judge. Additionally, Australia has hit a fiscal milestone with back-to-back budget surpluses for the first time since the Global Financial Crisis, while the Productivity Commission has provided a sobering update on our productivity growth. 

Finally, we'll discuss the dizzying array of factors impacting oil prices on top of the escalating Middle East conflict and what this means for the global economy. 

204 - Inflation trends maybe good? Interest rates stuck & China's sweeping monetary moves.

We begin with a look at recent inflation data. While headline inflation has decreased, Mark explore why the underlying numbers suggest continued vigilance is necessary. Our discussion then turns to the Reserve Bank of Australia's latest decision to maintain current interest rates.

We evaluate these interventions and their potential impact on China's economic trajectory, considering both domestic and global implications.

203 - Labour market news, a pacy 50 bps Fed rate cut, and how Middle East unrest affects us down here

In this short but packed episode, we go through the complex economic landscape facing Australia and the world.

We discuss the significance of the still tight Australian labour market and its implications for monetary policy, dissect why the US Federal Reserve decided on a rather large 50 basis point rate cut, and explore how Middle East tensions could spark global economic instability. All these factors set the stage for a complex upcoming Reserve Bank of Australia meeting.

202 - Central bank independence in a changing world; from the RBA to the CBRT

Prompted by proposed changes to Australia's Reserve Bank, as well as increased criticism of central banks globally, today we discuss what central bank independence means, its historical development, and the evidence for its effectiveness.

Mark analyses key moments in the formation of modern central bank theory including "The golden age of central banks " of the pre-2008 era, the impact of the Global Financial Crisis, and the post-COVID inflation shock.

We also discuss the implications of central banks acting as "accountability sinks" and explore current challenges to their independence.

201 - Welcome back

We welcome back AICD Chief Economist Mark Thirlwell, fresh from his holiday, as we dive into the market turbulence that peaked while Mark was celebrating his dad’s 80th birthday in Saltburn.

We explore the Reserve Bank of Australia’s decision to hold steady on rates, as anticipated, and examine the global interest rate landscape, including hints of US rate cuts following the Fed Chair’s speech at Jackson Hole. We also dissect the clash between market expectations and the RBA’s timeline for cutting rates in Australia.

Plus, we take a closer look at the latest GDP report: with six consecutive quarters of per capita recession, growth driven largely by population expansion and public spending, and signs of weakness in the private sector as household consumption, savings, and private investment all fell.

200 - A long goodbye

It's our 200th episode and Ivan's last ever :( Mark turns the tables on him and asks what's changed in economics since we started the podcast and what he's learned along the way. Plus, an experiment in UBI and what we can expect from Trumponomics and Kamalanomics.

A big thank you to all of our listeners for getting us this far.

199 - A marriage of convenience

Consumer confidence drops and expectations of an interest rate rise jump. Plus, the unlikely marriage of convenience between renting millennials and debt free baby boomers. And how do we make people have more babies? So far, not much seems to work.

198 - Tour De Canberra

Mark regales us with the vibe on the ground in Canberra. An around the grounds on the latest RBA Minutes, retail sales numbers and Core logic house and rent price data. Plus, if climate change results in supply shocks become increasingly regular to the point of predictability, should food inflation still be excluded from core inflation numbers?

197 - I mean it's one burrito Mark, what could it cost? $111?

Monthly inflation numbers have come in hot, adding pressure on the RBA to lift rates. What does the upcoming French election tell us about Britain, bonds and post-covid fiscal policy? And does the much hyped Guzman Y Gomez IPO and subsequent share price pop suggest that burritos are recession proof?

196 - Succulent Chinese deal

Trade with China continues to flourish despite strategic and political tension. Does Chinese Premier Li Qiang's visit to Australia mean we can continue to, as the Chinese saying goes, pull strongly against the raging tide? Plus, hawkish sounds from the RBA as the path grows ever narrower and the effect of WFH on real wages.

195 - Diverging Paths

An end to the era of globalisation has led to developing countries once again falling behind. As the costs of fragmentation become apparent, should a small open economy be doing more to bring back global trade? Plus, continuing resilience in the jobs market, continuing weakness in overall growth, and higher for longer rates in the US.

194 - The shipping news

Global shipping is gummed up again with Houthi attacks in the Red Sea, renewed pirate attacks in the Gulf of Aden, and drought affecting the Panama canal. But could it get even worse? Plus, inflation picks up again in Australia and retail sales remain stagnant.

193 - Risky business (with guest Roger Dennis)

New Zealand economist Roger Dennis advises boards globally on long-term thinking and foresight. We spoke to him on how directors should think about the seemingly endless proliferation of risks, what he calls the paradox of perparedness, and whether Kiwis, living on the edge of the world, have a unique perspective on risk.

192 - The juggler (Budget 24/25)

The treasurer had a juggling act to perform in this budget: fiscal repair, cost-of-living relief, inflation reduction and productivity growth were all balls to keep in the air. How did he do? Plus, the job market weakens and wage growth falls.

191 - Chart with decreasing yen emoji

The yen has plunged to a 34 year low requiring the Bank of Japan to spend billions to prop it up. Why are hedge funds attacking the yen? Plus, we preview the budget, higher for longer interest rates in the US and a weak retail sales number.

190 - A Cook’s tour

A Cook's tour of the global economy: we take in the European malaise, the Trump spectre over the US, the China shock 2.0, and a resurgence in migration.

189 - Not out of the woods

Inflation remains stubborn in Australia, running hotter in the March quarter than economists expected. Is there now a chance that the next rate move might be up again rather than down? Plus, a slight softening in the jobs market and just how much does negative gearing impact property prices?

188 - Industrial chic

Industrial policy is making a comeback globally and Australia wants in on the action. Boosting supply chain resilience, accelerating the net zero transition, and geostrategic risk mitigation are touted as key benefits. But does it stack up economically?

187 - Lost in the supermarket

A review into the supermarket code of conduct landed this week, raising fresh questions about competition. Can we raise prices for suppliers, while also lowering prices for consumers? Would increasing competition lead to more innovation? Or has the supermarket experience improved despite the lack of competition? Plus, strong US jobs numbers and an inflation point in the AICD's Director Sentiment Index.

186 - Statistical error

Questioning the official labour market data used to be the preserve of conspiracy theorists, but the surveys across the globe have been plagued by problems recently. Can we continue to trust these key economic indicators? Plus, dovish noises from the Reserve Bank on interest rates, as inflation continues to ease, though house prices march on.

185 - Productivity puzzle (Live at the AGS)

Live at last week's Australian Governance Summit, we asked what could be done about Australia's languishing productivity: can policy make a difference? Will AI save us? Could it be as simple as building more houses? Plus, a first rate cut might be nearing and an extraordinary plunge in the jobless rate.

Regular listeners will notice some snazzy new cover art this week. Thanks to our fantastic designer Jana Clark and photographer Graham Jepson for the fresh look.

184 - Per capita pain

Australia's GDP per capital continues to go backwards as growth slows to snail's pace. Plus, we look ahead to next week's RBA meeting, Powell hints interest rate cuts might be imminent in the US and more Swiftonomics.

183 - Narrowing path

Inflation is falling but so is growth, is the path to a soft landing for Australia narrowing still? Plus, a deal for what it's worth at the WTO and the UK economy as Willy Wonka experience.

182 - Trade daze

The World Trade Organisation met last week. Not that you'd know it. Is the dream of global trade done? Plus, with real wages finally growing, could the RBA really raise rates again?

181 - Bumpy road

An uptick in US inflation shows the path back down might not be smooth, plus back home the labour market cools, hyperinflation in Argentina, and is Bitcoin back?

180 - Speak now

After the new look RBA meeting, the governor now holds a media conference where she addressed the future path of interest rates, as well as Taylor Swift's effect on inflation. Plus, China acts to backstop its sagging equity markets.

179 - This one's optimistic

Inflation is moderating in Australia and the IMF says the global economy is on "the final descent toward a soft landing". 2024 might be looking up. Plus, what to expect from next week's new look RBA meeting.

178 - Stage 3 and me

We look at the government's changes to the Stage 3 tax cuts. How will this affect the distribution and will they be inflationary? Plus, business confidence plunges and the IMF warns against cutting rates any time soon.

177 - Twenty twenty more

Happy New Year listeners! Big ep to get us rolling:

Consumer confidence sliding, signs of slackening in the jobs market and weaker inflation point to the RBA holding in February, Houthi attacks on shipping in the Suez, more weak numbers from China, Mark's apocalyptic beach reading, and the housing market marches on.

176 - A merry little quizmas

It's another bumper quizmas episode. We score Mark on last year's forecasts and gaze into the crystal ball to see what's ahead in 2024.

Thank you to all of our listeners. Have a great break! We'll be back in January with more epsiodes.

175 - Polyphonic spree

The RBA will now speak with multiple voices with all board members expected to speak to the public. Will this lead to greater transparency or muddy the waters further? Plus, more bumper jobs growth, the MYEFO reveals another jump in tax receipts, Milei takes his razor to Argentine spending and another COP climate conference goes by.