My colleague Ben Fordham on Sydney radio 2GB wanted me to talk about an AFR story about 1,000 jobs to go in the now Blackstone-owned Crown Resorts. This is a human interest revelation on one hand, especially for those who’ll lose their jobs, but it could have bigger economic relevance.

When I taught economics in schools and then at the University of New South Wales, I’d use a TV advertisement for the clothing company Sussan that said: “This goes with this, goes with this at Sussan.” To make economics more understandable and even mildly amusing, I created Sussan Economics. I’ll use this to explain the bigger relevance of these Crown job cuts.

Simply put, this number of big job losses goes with falling demand goes with fewer businesses trying on price increases, goes with less business investment, falling confidence, less economic growth, more job losses, which goes with less inflation and lower interest rates, “at Sussan…”

There’s a debate on right now about interest rates and the so-called “last mile”, which sees inflation drop from the 3%+ region (where it is now) to the 2%+ region (where the RBA wants it). The AFR’s and Coolabah Capital’s Chris Joye says the last mile could be “10 miles”, and he’d clearly be on board with those economists who are arguing that the next rate move might be up.

Recently I explained that the respected economist Michael Knox from stockbroking firm Morgan’s says history dictates that unemployment has to rise notably before inflation falls. So, if these job losses for Crown workers is a sign that the past 13 rate rises are working, then no more rises are needed, and cuts should be coming.

I told Sky News yesterday when I do my 7.10 am finance report each Monday that rate cuts or rises will depend on data drops over the next three months. Yesterday, we saw retail sales helped the cause for rate cuts, with NAB reporting that “on a month-on-month, seasonally adjusted basis, growth slowed considerably but remained positive in March (0.3%) …”

The RBA would be glad to see fewer shoppers ignoring their 13 rate rises! But there are other reasons for Crown cutting jobs, as CEO Ciaran Carruthers explained to the SMH: “The challenges at Crown reflect greatly reduced foreign tourism, a sharp decline in local workers in the city centres, and restrictions on gaming play in Sydney and Melbourne.”

The AFR’s Zoe Samios added the following to explain why Crown was losing workers: “It is a consequence of reduced discretionary spend on gambling, tourism and entertainment, and working from home flexibility [plus]…inbound tourism is still down 24 per cent compared to 2019.”

The RBA would be happy to see this and wants to see it in more industries and businesses.

Of course, like Star Entertainment, Crown Resorts has been slugged by investigations into ‘behaviour unbecoming’ and threats around losing its licence, but this has mixed in with a lot of gamblers with expensive homes and big debts being smashed by 13 rate rises.

For those looking for interest rate relief, I point to Shane Oliver’s Inflation Pipeline Indicator that says inflation should be heading into the 2% region. This looks at real life economic indicators to predict what happens to inflation. As the number is below 3%, it implies that in the real world of restaurants, shops and non-compulsory services, prices are not rising, and some are discounting.

Here's that chart with the blue line (the indicator) falling quicker than the red line (the CPI) but the trend looks good for interest rate worriers!

Over the next three months, we need to see that the 13 rate rises are hurting the economy enough for the RBA to say it’s time for a rate cut. Unfortunately, more businesses (like Crown Resorts) need to kill jobs. That’s why economics is often called the “dismal science”.