We have revised our scenarios based on the latest data from our household surveys, and other available information.
Scenarios are a way of exploring different futures, and to consider the consequences, not as a forecast, but to facilitate understanding and debate.
None of these scenarios may turn out to be right…. Things change.
We use a framework driven from our core market model and we are going to look at the five potential outcomes, updated with the latest data and results.
Here is the summary results.
Since last time, conditions appear to have deteriorated further.
The RBA is not going to hike twice in any of the scenarios. It will cut to 0.5-1% in all five. Unemployment and bank losses will almost certainly be higher as well.
QE will come in all three bust scenarios. There won’t be any bail-ins. They are political suicide.
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.
