If one of my favorite Wall Street strategists is right, then the Albanese Government is on the verge of turning its economic calamity for workers into a permanently falling loss of living standards.
Michael Hartnett at BofA argues that central banks everywhere are in the process of “locking in” high inflation:
The Biggest Picture: high core inflation (Chart 2) + low unemployment + negative real policy rates; yet almost all central banks on hold/close to end of rate hike cycle thus “locking in” high inflation (as is trajectory of government spending, deficits & debt).
Hartnett believes inflation will fall away from here as a US recession takes hold. But that central banks will not do enough to extinguish it, and the next cycle will be much more inflationary as fiscal spending continues owing to war, inequality, decarbonisation etc.
Why is this such an issue for Australia?
Because it means that Canberra’s favoured economic model of mass immigration driving growth is going to backfire spectacularly as wages are suppressed but core inflation rises anyway on rents, energy, and global inputs like imported goods.
The RBA has already begun to mull this outcome as it wonders if Albo’s mass immigration is now inflationary.
If so, it is a recipe for an unprecedented tumble in Australian worker living standards as real incomes fall without end.
For instance, if Labor rules for three terms at an average CPI of 3.5% alongside wages at 2.5% then the downside to real incomes is shocking:
I am not so hawkish on inflation but neither am I bullish on wage growth as China goes ex-growth, AI comes for services jobs and the endless immigration supply shock robs workers of bargaining power.
In the meantime, workers that can’t get a job are being destroyed by Labor. Jobseeker is indexed to CPI but recipients are more exposed to large cost increases like rents and utilities. Bad luck!
Four federal Labor MPs have broken ranks to join calls for the government to increase the JobSeeker payment by $24 billion at next month’s federal budget.
The move came as the government hinted it may increase the $50-a-day payment by a little in the May 9 budget, but not to the levels demanded by the welfare sector.
The Labor MPs – Alicia Payne, Louise Miller-Frost, Michelle Ananda-Rajah and Kate Thwaites – have added their names to a letter composed by the welfare lobby and independent senator David Pocock that has so far garnered more than 330 signatures and which will be sent to Prime Minster Anthony Albanese.
It looks like they may get a few pennies:
“We will be completely focused on the questions around cost of living and the pressures that people are experiencing in this country. And we will have an eye to the most vulnerable in the decisions that we announce on budget.
“Now I understand the report we received … we’re not in a position to fund every good idea. We understand the pressures from those on JobSeeker. But people will need to wait and see what we’re announcing.”
They told us Albo was a working-class man from the projects. It looks more like he is either a liar or a fool duping those that lifted him from poverty.
I struggle to recall a more poisonous hypocrite in Australian politics than smiling nice guy, Anthony Albanese.
Meanwhile…Doomed Dutton says nothing…
