So, you want to work less, earn more and build awesome wealth. If you can do that you will be more fulfilled, never have to worry about money and spend more time with the ones you love. Most people do not realise but knowing the future allows you to do that.

I have never done predictions before. Only because:

a) I have never had the guts and

b) I am terrified of the humiliation of telling everyone I am brilliant only for facts to show I am not. I am not convinced my ego can handle that.

Anyway, I am now getting older and that means I no longer give a s**t about such things.

And so, I thought I would tell you what I think will happen this year regarding the economy, inflation, interest rates and more. Now for clarity let me make one thing straight. I am not God. I am not a financial advisor either. This means do not assume what I say below is fact or will happen. You need to take independent advice to ensure they match your circumstances before you take any action. Below is my rough and ready prediction based on my own knowledge, experience and research which to be honest is a bit patchy.

Inflation!

It is going down. And I expect it to go down which suggests interest rates may go down too. This is not a trade secret. Everybody has been saying so.

But in Australia we have what is known as sticky inflation. Sticky inflation is when the Reserve Bank keeps interest rates high to take the flame out of the economy – to slow it down so that prices fall, and inflation gets back under control.

The problem? Its taking a long time for that to happen in Australia. There are a few reasons for this

– Power costs

You don’t need me to tell you that power costs are simply ridiculous. I reckon its cheaper to buy a gold-plated Ferrari. For a country that has ample access to the sun and has so much of the stuff in the ground, it should be basically free.

And the high cost of power is one of the reasons inflation is sticky. Having high interest rates will not dampen power prices. Getting it out of the ground cheaper and processing it into real power will. Solar power which everyone assumes is free is not free. The infrastructure is ridiculously expensive, and we may be baking in the heat, but it is still not enough. So, we are bad at renewables and bad at digging the stuff out of the ground. Interest rates could be at 10% and it will still not change power prices.

For 2025 I expect power prices to go up making sure inflation remains sticky which may mean interest rates don’t go down as much as we may like.

– Household groceries

When well off or high-income families talk about grocery costs you know its grim out there. And grocery price hikes are not a myth. They are real.

The problem? Well 64% of the grocery market is controlled by Coles and Woolworths. That’s a lot. This duopoly can basically charge whatever they want and do not be fooled because they do. It explains why they made $2.8Bn in profit. Aldi in comparison made ‘’only’’ $500M.

I am not sure what the Australian Competition and Consumer Commission (ACCC) is doing but it is not working for you or I. It is a toothless tiger.

High interest rates will ensure we may buy less cakes and chips, but it is unlikely to change how we buy our stable items. And because of that I expect grocery prices to remain high for the next 12 months. And that will ensure inflation will remain sticky for longer too.

And so high interest rates will not bring down grocery prices because the high prices in supermarkets are more about profit making then the cost to get goods to the supermarket.

– Exchange rates

If you have been overseas recently you will find that you do not get much for your Aussie dollar. If interest rates fall, then our Aussie dollar falls further because investors pull their money out of Australia in the hope there are better gains elsewhere. A weak Australian dollar is not good for our economy as this increases prices of imports (read inflation) so our federal bank will keep one eye on inflation and the other eye on exchange rates before they make any decision to lower rates.

We Must Grow!

For the first time I felt the Reserve Bank hinted at a coming interest rate cut at its interest rate decision meeting. That was because it said ‘… that growth in output has been weak.’ It also said incomes and consumption have ‘recovered slower than predicted.’

More importantly, the RBA said that inflation has eased and is moving to target.

In other words, expect an interest rate cut. But before we get to that, let’s talk about growth. The Australian government will tell you we are growing. I don’t think we are.

Speaking to everyday people and clients it is obvious household pennies are being counted. It may look like people are spending but they really are not.

This influences business. Sales go down but costs are stubbornly high. That leads to less profit, which leads to less investment which leads to less employment which leads to less growth.

And that is exactly what is happening. How do I know? Well, the ATO has told us. Companies will pay $8.5Bn less in corporation tax. That would not be happening if we are growing. If we are growing, you expect it to go up.

My prediction – the statistics will show that in 2025 we are growing but due to witchcraft, trickery and misinformation most people will not realise it is the opposite.

So how can the statistics show we are growing when we are not?

Immigration!

I am all for immigration. After all I am an immigrate. But I believe in the right immigration.

Our government believes if it serves the government any immigration will do. And long term that is not good. You only have to see the state of the UK and Europe to see what unregulated immigration does to a country over time.

You see immigration is artificially inflating economic growth. If there are more people in the country, there are more people spending money which then shows ‘growth’ The real figure we need to concentrate on is spending per person. And that is down.

The problem? The Government cannot under any circumstances allow the country to go into recession. It would be a disaster for them. So, it will keep the doors open to artificially show the country is growing when it is not.

There’s more.

There are two guaranteed ways to tell the public employment is down and the country is growing. That is for local and federal governments to spend more (even when they do not have the money to do it) on employing more people and on goods and services.

The majority of new jobs being created at the moment are in the public sector. And guess what? You and I are paying for all of that even if there is no increase in productivity. At the other end, the private sector appears to be struggling and this we know because business investment is down and there are not that many private sector jobs being created. I can tell you we are telling our clients to be cautious. Don’t spend unless you need to.

But the boom in the public sector is hiding this. It’s making things look better than it really is.

If we look around the world interest rates have fallen a fair amount. In New Zealand and Canada, rates have already come down by 1.25 per cent. In the EU, rates have come down by 1.1 per cent. In the US they’ve come down by 1 per cent but the Federal Reserve in the US has told the market not to expect more than 2 rate cuts next year. And in the UK they’ve come down by 0.5 per cent. And yet in Australia it has fallen a pitiful 0.25%.

I predict that interest rates will fall but it is not going to be as fast everyone thinks. I believe it will fall maybe1% over the next 12 months with the first rate cut in March or April of 2025. That is because inflation appears to be coming down and the economy is slowing but we have a very cautious Federal Reserve, and our newly appointed governor will not want to put a foot wrong especially as those now in the USA have put the brakes on.

The Stock Market & Property Market.

In Queensland the housing bubble is still a bubble. In Melbourne or NSW there is evidence that prices are flattening out. If immigration remains high, then more people chasing less homes means higher prices and higher rents. I do not see that changing in the next 12 months although I think they will stabilise and flatten out.

The stock market. It takes a brave person to predict the stock market, and I have never met anyone who has managed to time the market perfectly. My personal feeling is that the next 12 months despite all the doom and gloom above the market will grow. I don’t know by how much.

Why?

Well, it is to do with US of A and our friend Mr Trump. He wants to tell the world that he is/ was the ‘best President in the history of the USA’’ and that means the stock market must go up. He only cares about the next 5 years. That’s it. And also the fact that the USA stock market is going bonkers anyway and shows no signs of slowing down.

The implementation of tariffs do not work in the long run. In the short run they can work wonders. Tariffs make USA goods and services cheap, and imports become more expensive. The logic says that if USA goods are cheaper or par with imports, USA companies will sell more, resulting in more profits, which results in high share prices. And we all know that what happens in the USA eventually follows through here.

So, there you have it. My prediction of what I think will happen in 2025. If by the end of 2025 I am right, you can bet all the pennies in your pockets for all the pennies in my pocket that I will scream at the top of my lungs to let the world know how brilliant I am. If on the other I am disgracefully wrong, I will simply say ‘it’s because I am not God’ or hope you forget that I wrote this blog in the first place.

Do you want to spend more time with those you love and not have to worry about money?

We have helped many do just that. If you think we may be able to help you, contact Hitesh at hitesh@wowadvisors.com.au or Ros at ros@wowadvisors.com.au or call 07 3161 9548