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 Venura, an economist at the Reserve Bank of Australia. In this video, I’ll take you through global and domestic economic conditions as of May 2025, as well as the RBA Board’s decision to cut the cash rate at its May meeting.

In recent months, the world has been watching the United States and their tariffs.

The first question to ask though is ‘what is a tariff?’.

A tariff is a tax placed on goods imported from another country. It makes imported goods more expensive, which then encourages consumers to switch to purchasing goods that are produced domestically, or from countries with lower tariffs.

In April, the United States placed tariffs on the rest of the world. Most countries, including Australia, received a tariff of 10%. This means American consumers and businesses will pay 10% more on goods imported from Australia than they did before.

Some countries, including China, received higher tariffs.

So, what does this mean for the global economy?

In the United States, the cost of imports will increase. This provides an incentive for US consumers to shift their demand towards domestically produced goods, and away from imported goods that were previously cheaper. But in many cases, domestic production is likely to be less efficient, meaning that consumers end up paying higher prices overall.

By disrupting supply chains, reducing productivity and raising costs, tariffs will reduce the supply capacity of the US economy.

At the same time, tariffs reduce the purchasing power of consumers and businesses, which could lead to lower spending in the US economy.

For the rest of the world, tariffs will lead to a decline in export demand because US consumers and businesses will buy fewer imported goods.

On top of this, trade tensions between large economies can create significant uncertainty.

This graph shows how uncertainty has changed over time. In an environment of high uncertainty, households will increase precautionary saving and businesses will delay investment. This will further decrease aggregate demand in the global economy.

So, what does this mean for Australia?

The direct effect of US tariffs on Australian exports is likely to be small, since exports to the US are a relatively small share of Australia’s total exports.

But there are also a range of indirect effects on Australia.

First, it is important to think about the impact of US tariffs on Australia’s other trading partners. The United States placed a 30% tariff on China, which is our largest trading partner. These tariffs will reduce US demand for Chinese exports and could therefore slow economic growth in China. If economic growth in China slows, this could reduce China’s demand for Australian goods, and in turn reduce our total exports. Overall, we think this indirect effect will be limited because Chinese fiscal policy is expected to offset the negative effects of tariffs on Chinese economic growth.

Second, the increased policy uncertainty, as we mentioned earlier, could also affect Australian economic activity. For example, if Australian companies are not sure about how things will pan out, they may choose not to invest.

Let’s turn to the Australian economy, starting with the labour market.

Labour market conditions have been steady in recent months.

The unemployment rate is basically unchanged since mid-2024, and the underemployment rate has stabilised since the start of the year after declining a bit last year.

The unemployment rate tracks people who are actively looking for a job but don’t have one.

The underemployment rate tracks people who have a job but want to work more hours.

Both measures are lower than their average levels over the past few decades, and the RBA continues to judge that the labour market is tight relative to full employment. A ‘tight’ labour market means the demand for workers, or firms who want to hire, is strong relative to the supply of workers, or people who want a job.

And now, inflation.

The RBA tries to keep inflation – ‘low and stable’. To achieve this, we try to keep consumer price inflation between 2 and 3 per cent. There are two key measures of inflation.

Headline inflation captures the prices of all goods and services in the Consumer Price Index.

Underlying inflation excludes unusually large price changes. This means it provides a better understanding of overall inflation trends.

Headline inflation was flat in the March quarter at 2.4 per cent, while underlying inflation decreased in the March quarter from 3.3 per cent to 2.9 per cent.

This is the first time since late 2021 that underlying inflation has been within the 2 to 3 per cent target range.

The key question is ‘where to from here for the Australian economy?’

The RBA is forecasting that Australian GDP growth will continue to recover, but at a slower pace than we thought at the beginning of the year.

The unemployment rate is forecast to increase a little, while underlying inflation is forecast to return to around the middle of the 2–3 per cent range and remain sustainably around there.

However, there’s an unusually large amount of uncertainty at the moment so there are risks in both directions.

With all that in mind, the RBA’s Monetary Policy Board decided to lower the cash rate to 3.85 per cent at its May meeting. The Board decided it was appropriate to lower the cash rate because inflation is expected to ease a bit further and remain around the middle of the target. However, the Board remains cautious given uncertainty is high and is ready to respond if needed.

That concludes our look at current economic conditions. For more student resources, visit our education page – links below in the description. Thanks for watching.