{"id":653841,"date":"2026-10-22T13:36:12","date_gmt":"2026-10-22T13:36:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/653841\/"},"modified":"2026-10-22T13:36:12","modified_gmt":"2026-10-22T13:36:12","slug":"economy-set-to-worsen-with-higher-unemployment-and-weaker-growth-on-the-way-jim-chalmers-reveals-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/653841\/","title":{"rendered":"Economy set to worsen, with higher unemployment and weaker growth on the way, Jim Chalmers reveals | Australian economy"},"content":{"rendered":"

Jim Chalmers has revealed December\u2019s mid-year budget update will project weaker growth and higher unemployment, as economists warn of a difficult six months ahead for the Australian economy<\/a>.<\/p>\n

Two days after a senior Reserve Bank official foreshadowed<\/a> the potential for another interest rate hike in under two weeks\u2019 time, the treasurer in a speech on Friday morning will say \u201chigher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity, and we can see that in the softening of the labour market\u201d.<\/p>\n

\u201cTreasury is in the process of revising all the numbers for the mid-year update,\u201d Chalmers will say, according to speech extracts seen by Guardian Australia.<\/p>\n

\u201cHigher interest rates and higher inflation are likely to mean softer growth and slightly higher unemployment.\u201d<\/p>\n

With the Albanese government already suffering the fallout from its ambitious tax reforms<\/a>, the deteriorating economic situation will be a further blow to Labor and Chalmers\u2019 popularity into the new year.<\/p>\n

Australian households are deeply pessimistic about the outlook, and Jonathan Kearns, the chief economist at Challenger, said \u201cthings have to get worse before they get better\u201d.<\/p>\n

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Jobs data last week showed unemployment reached 4.7% in September<\/a>, the highest in nearly five years. Despite this, financial markets on Thursday lifted the probability of a Melbourne Cup day rate hike to nearly 60%, according to ANZ.<\/p>\n

Kearns said the full impact of this year\u2019s four interest rate hikes were yet to fully flow through to the economy \u2013 and that was before the prospect of a fifth.<\/p>\n

\u201cThe unemployment rate will increase further from here, and we are yet to see the full decline in housing prices, so they are two pretty high-profile things that will impact how people feel about the economy,\u201d he said.<\/p>\n

\u201cWe could be seeing unemployment at 5%, and that will be a difficult threshold for the government.\u201d<\/p>\n

ANZ economists on Thursday said they now expected capital city home prices to eventually fall by 13.5% \u2013 a record peak-to-trough fall \u2013 before regaining some ground in 2028.<\/p>\n

With little end in sight for the Middle East conflict, high fuel costs<\/a> could also be a pain for motorists through the festive season and summer holidays.<\/p>\n

Sally Auld, NAB\u2019s chief economist, agreed that \u201cthe next six to nine months will be pretty challenging\u201d.<\/p>\n

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\u201cGrowth needs to slow. The RBA is facing an inflation challenge that\u2019s worse than they thought it would be as recently as August,\u201d Auld said.<\/p>\n

By this time next year, however, the economy should be sailing in smoother waters.<\/p>\n

\u201cHopefully by that point we should have lower inflation than we have today,\u201d Auld said. \u201cThat would be a step in the right direction.\u201d<\/p>\n

The government will hope for an economic tailwind ahead of the next federal election in 2028.<\/p>\n

But Kearns said Chalmers\u2019 policy options were limited for now, as any additional cost-of-living relief threatened to exacerbate the inflation challenge.<\/p>\n

\u201cThe challenge is that the government has been criticised, and probably fairly, for contributing to inflation through high government spending.<\/p>\n

\u201cBut if they pull back on government spending to reduce inflation, they will be gonged for contributing to the rise in unemployment.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Jim Chalmers has revealed December\u2019s mid-year budget update will project weaker growth and higher unemployment, as economists warn…\n","protected":false},"author":2,"featured_media":653842,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-653841","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/653841","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=653841"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/653841\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/653842"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=653841"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=653841"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=653841"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}