The RBA is gonna cut, cut, cut

The RBA is not going to cut today but it will again before the year is out. Recession is marching on Australia and it will have no choice.

Surely you jest, you say! But no, I am not playing. Australia’s terms of trade are on the verge of another major crash downwards. It is now next to certain that iron ore will be deep in the $30 before year end and that will wipe out major miner profits, wipe out Budget forward estimates before the MYEFO, and deepen as well as extend the national income recession. Here’s the forecast:

Add the mining capex cliff, peaking residential construction boom and vehicle manufacturing wind down and you have a triple employment shock arriving as well by year end and continuing all of next year.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.