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 Jacob, an economist at the Reserve Bank of Australia. In this video, I’ll take you through current economic conditions as of February 2025, covering developments in the Australian and global economies. I’ll take a look at inflation, unemployment and economic growth, as well as monetary policy and the RBA Board’s decision to cut the cash rate at its February meeting. Let’s start with inflation.

The RBA’s key priority is to keep price growth – or inflation – ‘low and stable’. To achieve this, we try to keep consumer price inflation between 2 and 3 per cent.

There are two measures of inflation that the RBA keeps a close eye on.

• Headline inflation, which captures the prices of all goods and services in the Consumer Price Index (CPI). This is the measure of inflation that the RBA targets.
• Underlying inflation, which excludes unusually large positive and negative price changes for goods and services in the CPI. Underlying inflation gives us a better understanding of overall inflation trends because it means we can put aside one-off factors that might not tell us very much about the overall state of the economy.

Focus on the black line: headline inflation has continue to ease over 2024 to be within the 2-3 per cent target range late last year.

Some of this decline has been due to temporary government subsidies to households, including electricity rebates.

You can see this in the purple bars – in late 2024 utilities prices were falling while most other prices were rising.

Trimmed mean inflation, which is one measure of underlying inflation, has also eased, and more quickly than expected a few months ago.

But trimmed mean inflation remains higher than headline inflation, mostly because of the impact of the government subsidies to households.

So the key takeways here are:

• headline inflation has eased by more than underlying inflation
• and headline inflation is expected to go back up again – as the subsidies unwind – before it falls again.

Underlying inflation is forecast to return to the 2-3 per cent range by March quarter 2025, and headline inflation is expected to return to the target range in the second half of 2026.

Developments in the labour market are also important to watch because maintaining full employment is also a goal of the RBA and the Reserve Bank Board alongside low and stable inflation.

The labour market is strong and expected to remain this way.

What do we mean by ‘strong’? A strong labour market is where the demand for workers from firms is high compared to the number of people available to work.

In this graph, we have two measures of the strength of the labour market:

• The unemployment rate, which tracks people who are actively looking for a job (but don’t have one)
• The underemployment rate, which tracks people who have a job, but want to work more hours

Both unemployment and underemployment are lower than their average levels, indicating Australia’s labour market is strong.

We can also see in the graph that both of these measures declined or were basically unchanged in late 2024, whereas they had been increasing in 2023. That suggests the labour market was gradually easing through 2023 but stabilised last year.

The unemployment rate is expected to increase slightly this year but to stabilise a little above 4 per cent, which is still very low compared to history. And the Bank expects that Australia’s strong jobs market will be supported by a pick-up in economic growth over the next couple of years.

So let’s look more closely at economic growth.

Australian GDP growth picked up a little in the September quarter of last year.

We can see the components that make up GDP growth. If the components are above zero, they add to GDP growth; if they are below zero, they subtract from GDP growth.

• Private demand (which includes household spending and business investment ) as been adding to GDP growth, but by less than the previous few years.
• Public demand (which is the direct economic activity arising from government spending ) has also been adding.
• Net exports (exports minus imports ) has been subtracting from GDP growth.

Looking ahead, economic growth is expected to pick up over 2025, driven by a recovery in household spending, which you can see in the growing yellow bars. Public demand is also expected to support economic growth.

However, as always, there are lots of uncertainties about the outlook.

A prominent risk involves the extent of new tariffs and how the global economy will respond…but there are also domestic uncertainties, including whether the labour market’s as strong as we think it is.

Let’s finish with an update on monetary policy.

At its February meeting, the RBA Board decided to cut the cash rate by 25 basis points to 4.10 per cent.

Prior to this meeting, the cash rate – Australia’s official interest rate – had been on hold at 4.35 per cent since November 2023.

While the cash rate has been reduced, the RBA Board assesses that monetary policy is still restrictive at 4.10 per cent. There has been good progress on inflation but the Board remains cautious.

In terms of future interest rate movements, the Board will continue to look at the data and see if the economy and inflation continue to evolve as expected.

That concludes our look at current economic conditions. For more student resources, visit our education page – links below in the description. Our next video will be published following the release of the May Statement on Monetary Policy. Thanks for watching.