Interest rate worriers and two guys based in Canberra — PM Anthony Albanese and Treasurer Jim Chalmers — would’ve been very happy with the wage news out yesterday. Simply, the annual rise to the end of the June quarter came in at 3.6%. This was lower than expected. If it’s a sign of data to come, it could get Albo and Dr Jim out of a very sticky situation.

Right now, the PM has a few sticky problems that need to play out. First, he has his Voice referendum that has the “No” case building at a rate of knots in the minds of those surveyed. This is how the SMH’s David Crowe reported the latest reaction to the Voice and its hit on the PM’s popularity: “Voters have cut their support for Prime Minister Anthony Albanese after a fierce political dispute over the Indigenous Voice, slashing his net performance rating from 16 to just 2 percentage points over the past month and weakening trust in the government’s message.”

Next, the PM and the Treasurer are getting the backwash of the rise in the cost of living. The fact that they have both supported the importance of building the budget surplus at the expense of actions that could reduce power bills and soften the blow of high inflation, on top of 12 interest rate rises, has made them look like accessories to these crippling costs that are affecting families.

The removal of Dr Phil Lowe from his post as the Reserve Bank Governor was partly done to show interest rate worriers that the Government was aware of their pain.

A related overhanging sticky situation is the Government’s vocal support for wage rises for those on minimum wages, the ABC, aviation workers and other unions, which could lead to what economists call “sticky inflation”. If that hangs around like a bad smell, it could be seen as another Government mistake that has hurt indebted households.

Sticky inflation would be characterised by inflation that stays above the 2-3% band that the RBA wants. This means interest rates could stay high for longer and could even result in more rises! It would also say that the expected rate cuts many economists are predicting for 2024 would be delayed and this would be electorally sticky for Albo, as the next election is due in 2025.

There’s another sticky situation that could become a worry if this sticky inflation ends up being another excessive concern of some economists, which the media has dwelt on too much, and that could be the threat of a recession!

You see, people like me and other economists have argued that monetary policy operates with a long lag and the big number of borrowers on fixed loans could delay the big bang from 12 rate rises. That bang could be coming now and throughout the rest of this year, as those on low fixed rate loans roll on to high interest variable rate loans.

The PM, Dr Jim and Dr Phil’s replacement, Michele Bullock, will be watching the data drops, praying for more good inflation news and less recession-implying readings.

Lately we’ve seen significant drops in retail spending, consumer and business confidence are at historically low levels and new tracking of consumer spending looks weak. “The CBA’s new household spending index, based on the expenditure patterns of 7 million people collated through cards, accounts and electronic payments, was flat in July to be up by just 1.3 per cent in the past 12 months,” the SMH’s Shayne Wright reports.

As a consequence of that and other recent data drops, the CBA’s economics team now expects rate cuts to occur in the first quarter of next year, with the cash rate moving from 4.1% now down to 3.1% by the end of 2024.

BetaShares chief economist David Bassanese has looked at recent economic numbers and now thinks the RBA has hit the top of this interest rate cycle.

He thinks the new central bank boss will be looking for signs that inflation concerns should be downgraded and recession worries take centre stage. Thursday’s job numbers will be an interesting test, as economists expect no change to the 3.5% unemployment level, but they will be looking for indicators that say those 12 rate rises are now hurting job creation.

PM Albo and Dr Jim will be in a sticky situation until rate rises stop, inflation isn’t looking sticky and recession talk is off the table.

And that won’t happen for about a year!