labor wealthy Australian economy

A recession in 2020? It’s easy to imagine, if you consider...

  • Australia has a worsening unemployment rate and pathetic fiscal response
  • If the nation turns to the RBA for further monetary stimulus it will be forced into the untried approach of quantitative easing
  • Recession indicators -- “yield curve inversions” went off around the world simultaneously in 2019
  • The gap between anaemic economic growth rates and sky-high asset values is opening up into a chasm. When global growth is so dismal and spotty, how can we be seeing such high valuations in capital city housing markets, in US markets for pre-IPO unicorns, in the NASDAQ, and in European government bonds? All of which are bid to within an inch of their life!

Once you go looking for reasons to worry, they’re easy to find. I’ve written plenty over the last year about risks, and about the prospects of a 2020 recession.

But we must beware of confirmation bias, the human cognitive quirk that leads us ever deeper into a web of beliefs we already hold. It’s more enjoyable to read about bad news when we’re worried than to have those beliefs challenged.