Are we heading for a fall? Let me share my economic and stock market crystal ball with you.

It’s a question some of my more nervous financial planning clients ask me. Friends and people in the street ask me the same thing. So let me share my economic and stock market crystal ball.

Let’s do a quick eco-check to see how troubled our economy is. Here goes:

1. Unemployment is still a low 4.2%.
2. In August, we lost 5,400 jobs when economists expected a 21,000 increase.
3. Part-time jobs rose 35,000 but we lost 40,900 full-time jobs.
4. The participation rate of workers is falling, which historically isn’t a good sign for an economy.
5. For the June quarter, economic growth picked up from 0.3% in the March quarter to 0.6%. And that took annual growth from 1.3% to 1.6%, which is a positive sign.
6. Westpac’s consumer confidence number fell 3.1% in September to 95.4 and is below the average reading of 100.23, which was for the period 1974 to 2025. This isn’t positive.
7. While NAB’s business confidence reading fell from 8 in July to 4 August, that 8 number was the best since August 2022.
8. Annual quarterly inflation looks good for rate cuts, down from 2.4% to 2.1%, but monthly inflation rose to 2.8% in July. While the former helps rate cuts, the latter doesn’t, though monthly numbers are less reliable.

A fair call on the economy is that we’re a good chance to avoid a recession. But the economy could do with another interest rate cut. Yesterday’s weaker-than-expected job numbers should help the RBA cut rates at the end of this month, which would be ideal for confidence levels. If not September 30, then November 4 — Melbourne Cup Day, would be a good gamble for a cut.

A November cut might be more on the money because we don’t get the September quarter inflation statistic until October 29. This cautious RBA is likely to want to see that before cutting rates. A fourth rate reduction of 0.25% for this year taking the cash rate of interest from 3.6% to 3.35% would be good for an economy that needs stimulus.

A rate cut will help stocks that haven’t shot the lights out this year. A 6.6% rise year-to-date isn’t huge and 49% over five years isn’t huge either by historical standards. So, I think our stock market will be driven by Donald Trump and his beloved Wall Street and the Nasdaq on Times Square, New York.

The US stock market could be rocked by a bad China-US trade deal. However, the latest news reports look relatively positive, though you never know with this human curve ball US President. I’m personally investing on a sensible deal that won’t derail Wall Street, on the basis that D. J. Trump loves New York Stock Exchange approval.

The next worry is the Supreme Court that could rule the President’s tariffs illegal. While this could disturb the stock market, any sell-off could be a buying opportunity, with some stocks sold off because they would’ve gained from tariffs while others bought because they were going to be hurt by tariffs.

While this could cause a deficit/debt problem, Wall Street usually expects the Congress to kick this can down the road. So, I’m not concerned about stock prices for 2026. I could be after next year!

To power Wall Street and then out market, I think lower interest rates, Trump’s promises of lower taxes and deregulation on top of the huge gamechanger called Artificial Intelligence will keep stocks going higher.

When AI kills too many jobs, that’s when I’ll worry about a stock market sell-off, so I’ll be a big time labour market watcher. And you should watch this space!