The IMF has predicted the worst world recession for 50 years with three major economies slowing (USA, China, Europe) and an ongoing war in Ukraine.
Some will remember the recession of the early 70s when inflation rose to 17% in the UK. Now things are different, governments have high debt, households have massive debt so if anything the situation could be worse. The Central Banks only have interest rates in their tool bag.
Turkey tried to buck the trend by not raising interest rates and look how well that has turned out! Its inflation rate is 80%
Given recent events I don’t think we need the IMF to confirm that there will be significant economic fallout. I’ve been buying various things because I expect them to no longer be available when companies go belly up. Either they won’t be available or the price will be prohibitive.
I’ve noticed that someone is propping up prices of certain foods. Not sure how long that will last, enjoy it while it’s there. I’m just glad to have no mortgage. But I can see a future where we might not have a pension.
I remember the inflation rate as greater than that … and indeed, in 1975, it was:
By Alvin Shuster Special to The New York Times
June 14, 1975
LONDON, June 13—Britain’s inflation rate has jumped to a record annual rate of 25 per cent, the highest in Europe.
The announcement today on the retail price index represented another blow to the Government of Prime Minister Wilson, who is under increasing pressure to take some dramatic action to try to curb inflation.
The announcement also served to confirm the general feeling in Britain that Mr. Wilson’s “social contract” with trade unions for voluntary wage restraint has virtually collapsed.
Between April and May, the index rose 4.2 per cent, the largest monthly increase on record. if inflation continued here at that rate it would mean an annual rate of more than 50 per cent.
As it is, the May figures showed an actual increase over the year of 25 per cent, largely because of higher prices arising from new taxes and other Government measures as well as from the impact of big wage increases.
Would they dare? Its value may be eroded but it would be a brave government that scrapped something that you actually pay for during your working life.
It could happen here in theory because we don’t contribute toward our pension and there are now as many Millennials in the population as Baby Boomers so even our political power is being diminished.
Today the latest quarterly inflation figures are to be released by the ABS, it is expected that inflation will be lower than the last quarter but because a low inflation quarter will drop out it means that annual inflation will rise. The Reserve Bank predicts that inflation in Australia will reach 7% by the end of the year.
While I was typing the inflation figure has come in and is much as expected
Inflation over the year to June hit 6.1 per cent, which is the highest level in 21 years, since the GST was introduced.
The Consumer Price Index from the Australian Bureau of Statistics shows that prices rose 1.8 per cent in the June quarter, which was slightly below the March quarter inflation rate of 2.1 per cent.
That wasn’t a world recession was it? That was more like the Asian Financial Crisis, it only affected some countries. Australia hadn’t had a recession for over 30years until the pandemic when we had a brief one.
They have already dared. Boomers have nothing to fear, but gen X like myself and anyone younger will see all the beneifts we have seen eroded by the time we retire. My retirement threshold is currently in the mid 2030s. Unless there is a radical change, I can see that being extended.out of reach as a result of the situation we are in. Many countries don’t have state pensions. People have to work until they drop. Happy days!
I despair of this world I really do. It’s imploding. I’m Gen X and I’ll have to work until I physically can’t. An eclectic CV hasn’t helped my pension much, either. I’ll be one of those people who sits in the park talking about “the good old days”, and “back when I was young”.
