Explore Economics

Maddy Terrell

So I think working as an economist, I don’t know about you, but I was shocked at the amount of impact you can have in your role and by impact I mean influencing people’s decision making or influencing policy outcomes to improve the welfare of the Australian people or broader society as well.

Natasha Cassidy

The people I know that are economists do such a wide range of things. So you might be working and thinking about what the impact of climate change or geopolitical shocks might be on the Australian economy; you might be looking at housing affordability or improving education outcomes for preschoolers. And then I think about friends of mine that are economists that are in the private sector – they’re thinking about the cost benefit analysis of big investments projects for firms.

Emma Chow

So I’m working in the Education team so one of the really big problems we’re trying to address is this declining size and diversity in the economics student population. It’s a really complex issue so I guess you need to look into the data and do some research to really understand what are the drivers behind this.

Chris Schwartz

I guess a big impact that the team that I’m in, the media team, tries to have is how can we explain the decisions the we or the RBA make to as broad of an audience as possible.

So being able to work to explain those in a way that people will be able to understand is probably the most rewarding for sure and impactful thing that I’ve worked on.

Geneve Bullo

Having impact and influence is one of the highlights of a career in economics.

Geneve Bullo

I think as an economist, throughout your career, you’re always going to be answering different questions, the project that you’re working on is probably going to be different to the last and you’re going to be picking up different topics of expertise.

Natasha Cassidy

I think for me I have to think back to the big events that happened internationally during my time as an economist and most recent was obviously the pandemic and at the time my role was leading a team where we trying to think about what would be the outlook for the labour market and inflation over that period.

If you remember sort of in those early days of 2020, you had these pictures of people queuing outside Centrelink because their hours had been drastically cut or so forth at the same time there was really strong demand for health care workers and the models that we normally use well they’re not set up to answer these kinds of questions and so we sort of had to the team had to sort of think about things, throw the playbook out if you like, and think about things about it more intuitively.

Ashwin Clarke

One of the most memorable things for me was analysing how the trade tensions we faced over the past few years have impacted Australia and one of the really unique things that we can bring as an institution that I realised at that time was it’s not just about the models, and we had really good models to kind of think through these problems, but we complemented that with information from people who are feeling it on the ground.

Maddy Terrell

With a career as an economist you can tackle all sorts of problems. It’s not just the obvious things like bringing inflation down or keeping unemployment low, but it also includes a range of things like other big issues facing society. Things like climate change, inequality, the gender pay gap and the impacts of artificial intelligence.

Maddy Terrell

So a typical day as an economist usually starts with a team meeting where we talk about what we’ve got for the day ahead We then often have a data release. And so data is the backbone of the work we do as an economist.

Geneve Bullo

As an economist you’re always constantly working with data but also more importantly how to communicate to that to your audience.

At the Bank we have a lot of data and a lot of questions that we need to answer so essentially what we’re doing is that all our data and evidence are little puzzle pieces in a story about the Australian economy

And so in my role kind of what I have to do is square all those pieces of information and come up with an narrative about how businesses are faring right now after a few years of challenges.

Ashwin Clarke

Some of the great things about a career in economics are that it gives an entry into a really wide range of fields. Just to take my friends that I went to university with as an example: one is a product executive who is responsible for creating new products for a healthcare company, another is an economics adviser at the most senior levels of government; and another is a data scientist who’s able to analyse the vast reams of data produced by transportation companies. So the most interesting job by far is a friend of mine who is a board game designer and he’s used economics to fine tune the mechanics of his games to make them interesting and keep people playing.

Hi, I’m Nick, thanks for joining me! Today we’ll look at what’s happening in the economy.

Before we begin, for the students and teachers watching, we’ve created a worksheet to go with this video. Links are in the description below.

Let's start with inflation, which measures how quickly prices are rising over time.

In Australia, inflation is still too high and remains above the RBA's target band of 2 to 3 to 3 per cent.

Headline inflation (the red line) tells us that consumer prices have increased by 3.9 to 3 per cent over the year to the June quarter. Underlying inflation (the blue line) removes large, one-off price changes from the headline measure and gives us a clearer picture of price pressures in the economy. Underlying inflation was 3.6 to 3 per cent, over the year to the June quarter, also above the RBA’s target, illustrated by the grey area across the graph. So, both measures of inflation are telling us the same thing, inflation is too high.

In our video for May 2026, we looked at the causes of this higher inflation in detail. There’s a link in the description, but to recap, there are two main reasons.

The first is that demand in the Australian economy continues to be stronger than supply. Put simply, when people want to buy more goods and services than the economy can produce, prices tend to rise quickly.

The second reason is to do with higher oil prices. The conflict in the Middle East has disrupted important shipping routes, pushing up the global price of oil. Because oil is used to produce fuels like petrol and diesel, when oil prices go up, fuel prices usually rise too.

You can see the impact here in this graph. Petrol and diesel prices rose sharply in March and April when the conflict began. Prices then eased as the United States and Iran entered peace talks. However, prices increased again in July as the conflict re-escalated, and remain higher than before the conflict began.

Higher oil prices can also raise the prices of other goods and services, not just fuel. That’s because many businesses use fuel to make and transport their products. For example, construction companies have faced higher costs for fuel and for oil-based building materials, such as plastics and cabling. And when businesses face higher costs, they may need to raise their prices.

Since the start of the conflict, we’ve seen that some businesses experiencing cost pressures have increased the prices of their goods and services, while others are looking to do so.

To bring inflation down, total spending – or demand in the economy – needs to slow. This will help bring demand back into balance with supply.

With that in mind, let’s look at Gross Domestic Product, or GDP. GDP can be measured as the total value of spending on goods and services in the economy, and this helps us understand total demand.

Quarterly growth in GDP slowed to 0.3 to 3 per cent in the March quarter. This brings year-ended GDP growth to 2.5 to 3 per cent, as we can see in the dark blue line.

But here’s the thing: some parts of the economy are growing more slowly than others. Let’s use the housing market as a case study.

We’ll start by looking at housing prices in Sydney and Melbourne, and how they have changed over time.

Here, the vertical axis shows an index. An index helps us see how much prices have changed over time.

In this graph, housing prices in January 2013 are represented by the number 100. Everything after that shows how prices compare with that starting point. For example, if the index rises from 100 to 150, that means housing prices are 50 to 3 per cent higher than they were in January 2013.

Looking at the graph, housing prices in Sydney and Melbourne have increased substantially since 2013. But let's focus on what's happening more recently. If we zoom in, we can see that housing prices in Sydney and Melbourne have started to decline in 2026.

But what about other cities? Housing prices in Brisbane, Adelaide, Perth and regional areas, are still increasing in 2026, but their growth has slowed in recent months compared with previous years.

In summary, the housing market has slowed in recent months. This reflects many factors, including increases to the cash rate and the tax changes announced in the federal budget.

The housing market is one of the key ways that changes in interest rates flow through the economy. In more technical language, it is one of the channels of monetary policy transmission. Changes in interest rates lead to changes in housing prices. This can affect spending in the economy, and in turn, inflation.

A decline in housing prices tends to lower household consumption for a few reasons.

First, it reduces the wealth of homeowners. If homeowners believe their wealth is lower, they might feel they need to save more and spend a little less to reach their saving or retirement goals.

Second, it often leads to a lower number of transactions and sales. Households typically purchase new household items when they purchase a new home, like a new fridge or washing machine. If fewer people are buying houses, then this may also lead to less spending on household items.

A decline in housing prices may also lead to less construction of new housing, which means lower dwelling investment. If housing prices decline, and the cost of building houses stays about the same (or even rises), then builders will earn lower profits on building new homes. This means they could decide to build less, which would reduce investment and lower economic activity.

While the housing market has been slowing, other parts of the economy have been growing more quickly.

One area that has been particularly strong is business investment, driven by investment in data centres. This reflects the rapid global growth of AI. AI systems require enormous amounts of computing power, and data centres provide the infrastructure to support this.

This graph looks at one measure of business investment in data centres in Australia. As new data centres are built, they show up as growth in buildings and structures. We also see growth in machinery and equipment, through the installation of things like cooling systems and power infrastructure. Here, we can see a sharp increase, highlighting recent the surge in AI-related business investment.

Now, we’ll turn to the other half of the RBA’s dual mandate, the labour market, before finishing with the recent cash rate decision.

The labour market has eased a little further in recent months, after being very strong for the past few years.

The unemployment rate is one indicator of the labour market, and it has increased a little this year as demand in the economy has slowed and employers may have adopted a wait-and-see approach to hiring due to the Middle East conflict. The unemployment rate was 4.4 to 3 per cent in June, which is still fairly low compared to history. Other labour market indicators, like average hours worked and underemployment suggest there is still some tightness in the labour market.

Overall, the RBA assesses that the labour market is still a little tighter than full employment.

So, how does the RBA see the economy looking ahead?

High inflation, which dampens household disposable income, along with higher interest rates and a slowing housing market, is expected to slow spending growth in the economy this year. This will help bring demand back into balance with supply, and put downward pressure on inflation.

With all these things in mind, the Monetary Policy Board decided to leave the cash rate unchanged at 4.35 to 3 per cent at the August meeting.

Inflation remains too high and the Board remains focused on returning it to target. The economy will need to slow to help rebalance demand with supply and bring inflation down. The Board has raised the cash rate three times since the start of the year and will assess how the economy is evolving.

That wraps up our look at what’s happening in the economy.

For students and teachers, if you want to learn more, download the worksheet linked below to check your understanding and apply what you’ve learned.

For other resources, head to our education page. Thanks for watching!