1. Forecasting slowdown in our economy

With Treasurer Dr Jim Chalmers to unveil his first Budget tomorrow night, he will tell us the economy is set to slump next year. But it won’t be a recession, which Europe and possibly the USA look set to endure. Our economy is now growing at a 3.5% pace but it will halve to 1.5% in 2023-24. And that’s exactly what the Reserve Bank’s interest rate rises are supposed to do to bring down inflation. The only problem is that economic forecasters can often make weather forecasters look positively reliable!

2. House prices predicted to drop 20%

Meanwhile, Reserve Bank secret modelling predicts house prices to drop a huge 20% by the end of 2024. 2022 brought just over a 20% rise for national house prices, but the RBA thinks the impact of rising interest rates and the associated slowdown in growth, plus rising unemployment, will KO house prices by around 20% from the peak in price rises to the bottom in late 2024. This is bad news for sellers but great for patient buyers of property, but the RBA warns they will be paying higher interest rates next year.

3. Despite all of the bad news, the stock market is set to jump 95 points or 1.42% at the open today

Wall Street had a great positive day on Friday with the Dow Jones Index up a big 2.5%, which made it a 4.7% gain for the week. But why the positivity after so much negativity this year, with the US stock market down 21% year-to-date? Some US central bank officials implied a pause in interest rate rises was getting close and the market liked what it heard, as company profit reports came in better than expected.

4. US consumers still shopping til they’re dropping

Credit card company American Express has bad news — US consumers continue to shop until they drop! CNBC says American Express (and other credit providers) US consumers have demonstrated a willingness to continue to pay higher prices in the face of a sluggish economy that could be tipped into a recession. “This comes as AMEX reported stronger-than-expected third-quarter earnings and revenue, while raising its full-year forecast,” Yun Li reported. “The company said overall customer spending jumped 21% year over year, driven by growth in goods and services as well as travel and entertainment.”

5. Data galore but our Budget will impact stock market

With the US stock market positive, what are the big economic releases that could hurt or help stocks? In the US, data on home prices, consumer confidence on Tuesday is followed by new home sales on Wednesday and then Thursday brings the biggie — economic growth. Friday brings another important reading — Chinese economic growth. Locally, the data drop is less market impactful but Tuesday’s Budget is bound to grab the attention of the stock market.