Looking back on 2025, it’s tempting to think it was just another noisy year that blurred into the background. But once you slow down and actually line up the events, a very different picture emerges. Conflict intensified, political power shifted, markets absorbed shocks that once would have caused panic, and several long-running assumptions about global leadership were quietly challenged.

This episode is our annual predictions review, where Paul puts last year’s calls back on the table and we assess how they actually played out. We walk through economic growth, inflation, interest rates, housing, global markets, geopolitics, and asset prices. You’ll have to tune in to find out how he did. 

From there, Paul lays out his 2026 predictions, explaining how the forces that defined 2025 are likely to evolve rather than disappear. We talk about rising geopolitical tension, the shifting balance between the U.S. and China, ongoing conflict risk, and what all of this could mean for growth, inflation, and markets in the year ahead. It’s less about bold claims and more about understanding the range of scenarios we’re walking into and why 2026 may not look like a repeat of the year we’ve just left behind.

Episode Highlights: 

[00:06] We open with a year-in-review framing and reflect on how chaotic and overwhelming 2025 felt in hindsight.

[01:23] A rundown of Trump’s second-term actions, including climate withdrawal, migration crackdowns, and institutional shakeups.

[02:28] Elon Musk’s brief role leading the Department of Government Efficiency and the fallout from mass federal job losses.

[04:28] The assassination of Charlie Kirk and its impact on political discourse and social tension in the United States.

[05:41] Trump’s Liberation Day tariffs and why global markets proved more resilient than many expected.

[07:13] Central banks begin cutting rates as inflation eases after years of post-COVID tightening.

[08:20] Conflict becomes the defining theme of 2025, beginning with Gaza and a fragile ceasefire.

[09:09] Escalating tensions between Israel and Iran, including U.S. military involvement.

[10:29] Australia confronts domestic terrorism and renewed concerns for public safety and social cohesion.

[12:14] America’s expanding military reach and the implications of extraterritorial force.

[13:19] Trump threatens Venezuela and signals a more aggressive hemispheric strategy.

[15:48] Political shifts in Canada and Brazil reshape leadership and regional dynamics.

[17:03] India and Pakistan tensions flare, highlighting risks between nuclear-armed nations.

[18:21] Leadership upheavals across Asia, including South Korea, Japan, and Thailand.

[19:18] Earthquakes in Myanmar and Afghanistan reveal how global humanitarian crises are often underreported.

[20:07] The Ukraine war continues, with failed summits and diminishing hopes for near-term peace.

[21:21] Europe recalibrates as Germany loosens fiscal rules and questions reliance on U.S. defense.

[23:24] Political instability spreads across France and Turkey amid protests and resignations.

[25:23] The conversation shifts to how geopolitics shapes economic forecasting.

[25:53] Artificial intelligence dominates economic narratives with trillion-dollar valuations and massive infrastructure bets.

[27:16] A sober look at the AI “bubble,” past tech booms, and why returns may take longer than expected.

[30:04] Tesla, electric vehicles, and how China’s manufacturing scale is reshaping global competition.

[32:18] The U.S. and China trade confrontation and why China may have gained strategic advantage in 2025.

[35:26] China’s use of industrial chokeholds, rare earths, and long-term strategic patience.

[37:53] Structural weaknesses inside China, including deflation risks, debt, and slowing demand.

[40:09] Reviewing 2025 predictions on Australian GDP, population growth, unemployment, and housing prices.

[42:17] Housing supply constraints and why prices rose across every capital city.

[44:39] Inflation outcomes, interest-rate decisions, and where forecasts narrowly missed.

[46:47] Australia’s election surprise and the collapse of expectations around the coalition.

[48:20] Global growth forecasts, Ukraine assumptions, and reassessing geopolitical certainty.

[50:02] Revisiting predictions on AI, trade wars, and geopolitical outcomes.

[51:04] Asset performance review covering gold’s surge, oil prices, and iron ore trends.

[52:56] Reflections on Bitcoin, speculation, and investor psychology.

[54:28] Final prediction scorecard and what forecasting gets wrong in chaotic years.

[55:23] Turning to 2026 and why the coming year may be even more volatile than 2025.

[56:28] A three-power world order emerges as the U.S., China, and Russia pursue influence differently.

[58:03] Ukraine, Taiwan, and Greenland surface as flashpoints that could define the next phase of conflict.

[1:01:35] How U.S. midterm elections affect strategic timing for China and Russia.

[1:03:21] Why delaying negotiations may benefit Russia and China more than early deals.

[1:06:00] Long-term risks of escalation and the limits of economic deterrence.

[1:10:30] The economic consequences of prolonged geopolitical instability.

[1:14:00] How power, patience, and credibility shape global leadership.

[1:18:00] Broader reflections on political economy versus traditional economics.

[1:22:30] Why consistency and expectations matter more than short-term shocks.

[1:26:30] The role of institutions and historical cycles in shaping outcomes.

[1:30:30] Stepping back to assess what 2025 revealed about the global system.

[1:34:30] Why economic theory struggles in periods of extreme political disruption.

[1:38:30] Lessons from forecasting amid uncertainty and conflicting forces.

[1:41:30] Transition toward closing reflections and intellectual foundations.

[1:44:19] A discussion of Adam Smith, The Wealth of Nations, and the meaning behind the podcast’s name.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• International Monetary Fund – World Economic Outlook
• World Bank – Global Economic Prospects
• Reserve Bank of Australia – Statement on Monetary Policy
• U.S. Federal Reserve – Monetary Policy Overview
• OECD – Economic Outlook
• The Wealth of Nations

Inflation has turned upward again, and this month’s news brings a shift that economists and households alike will feel. In What’s in the News, we start with the first official monthly CPI release from the ABS, which shows headline inflation rising to 3.8 percent. We walk through what’s driving the move including housing costs, food prices, and the sharp jump in electricity bills. We also look at why the RBA is expected to hold rates despite the reversal in trend.

In The Hand, the conversation shifts to the real pressure point behind the scenes: structurally higher energy costs that rebates have been masking for more than a year. We examine how years of policy instability have stalled long-term investment in baseload generation, why emerging technologies like hydrogen remain far from cost-effective, and how the rollback of subsidies is exposing the true cost of the system Australians rely on every day.

Then in The Invisible, we turn to the widening housing shortfall, where record population growth is colliding with weak construction activity. Domenique outlines the gap between migration and dwelling supply, and Paul breaks down why the Housing Australia Future Fund has fallen dramatically behind its targets. Together, we connect these trends to the structural forces shaping inflation, affordability, and opportunity across the economy.

Episode Highlights: 

[00:06] We open with a look at the first official monthly CPI print released by the ABS.

[01:01] Listener encounters at a securitisation conference spark a conversation about academic roots and shared backgrounds.

[02:09] Interest grows around the idea of a live event as the two of us gauge audience enthusiasm.

[03:36] The What’s in the News segment begins with a deep dive into the October CPI reading, which shows inflation rising to 3.8 percent.

[04:20] Discussion turns to why Australia shifted from quarterly to monthly CPI reporting and how the ABS constructs the new series.

[06:36] Key inflation drivers include housing, electricity, and food come into focus as we unpack the pressures behind the latest numbers.

[08:16] The conversation revisits the RBA’s rapid tightening cycle, from the 0.1 percent cash rate to the 4.35 percent peak.

[10:09] Temporary electricity rebates are examined for how they distorted inflation on the way down and again on the way up.

[11:09] Rising food and beverage costs are added to the broader cost-of-living picture.

[12:44] Record government expenditure, now sitting at 26.5 percent of GDP, is identified as the largest underlying driver of inflation.

[14:15] Health, defence, and the NDIS emerge as the categories fueling sustained fiscal pressure across government budgets.

[16:30] Connections are drawn between government spending, tax receipts, and Australia’s dependence on resource exports.

[18:40] The question of an RBA hold or hike prompts a discussion shaped by timing, data trends, and the approaching holiday period.

[19:23] This month’s CPI print is framed as a turning point that signals a new phase in the economic cycle.

[21:31] The Hand segment begins with an exploration of energy bill rebates and the sharp increases appearing as those supports roll off.

[23:22] The political timing of the rebates is questioned, along with the broader economic logic behind them.

[25:46] A recent visit to a hydrogen facility highlights the steep technological and financial challenges of emerging energy solutions.

[27:35] Long-term energy planning hurdles are traced back to more than 15 years of policy instability and shifting priorities.

[28:59] The realities of baseload replacement are discussed, noting why renewables still struggle to compete with ageing coal assets on cost.

[30:35] Government trade-offs come into focus as electricity costs, health spending, defence needs, and tax policy collide.

[32:13] The Invisible segment begins by contrasting record migration levels with Australia’s slow construction output.

[34:16] The scale of the housing shortage becomes clear through vacancy rates, construction gaps, and CBRE’s projected 75,000-unit apartment deficit.

[35:00] Attention turns to the Housing Australia Future Fund and its promise to deliver 55,000 homes for $10 billion.

[37:19] Reality falls far short of the target, with just over 4,000 dwellings counted so far and fewer than 400 actually built.

[38:41] Dwelling costs under the program are unpacked, showing average figures between $800,000 and more than $1 million per home.

[40:15] Migration trends, construction slowdowns, and rising costs are connected to Australia’s widening housing imbalance.

[40:44] Structural challenges in energy, housing, and inflation are reframed as areas of opportunity for households and businesses able to adapt.

[42:51] The episode wraps with a preview of next month’s annual Predictions episode and a look at the political and economic forces ahead.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• The Reserve Bank of Australia (RBA)
• Australian Bureau of Statistics – Monthly CPI Indicator
• Housing Australia Future Fund
• CBRE – Residential Market Reports

This week, as the dust settles on another quarter of global economic uncertainty, we’re trying to find pockets of optimism. We actually found one right here at home. Domenique kicks us off with a surprising announcement. She's launched a new dip company with her partner in New South Wales! We take that local entrepreneurship and immediately zoom out to the world of finance, where gold prices are up a remarkable 50% this year. The whole conversation becomes a search for the connections between small-scale ventures and the massive forces that drive the world economy.

In our first major segment, What’s in the News, we dive into three of the week's biggest movers including the Reserve Bank of Australia’s recent decision to hold rates, the latest Nobel Prize in Economic Sciences, and the World Intellectual Property Organization’s innovation rankings. This leads to a discussion about the true engines of progress. We look at everything from the history of scientific thought to the painful but necessary concept of creative destruction. Our conclusion? Sustained, meaningful growth doesn't come from policy alone. It relies on how well societies connect foundational knowledge, invention, and an institutional openness to radically new ideas.

We transition into a hard look at global stability. In The Hand, we break down the surprising resilience of Russia’s war economy, the shadowy and often misunderstood hidden oil trade, and what a slowing GDP across major nations actually means for global risk. Then, we wrap up with The Invisible, which tackles Elon Musk’s insistence that population collapse is the greatest long-term threat to civilization. This prompts us to consider the future of growth itself, and whether an aging, shrinking global populace can still power the world forward.

Episode Highlights: 

[02:12] Our conversation shifts to investment regrets and the surge in gold prices, up over 50% this year.

[03:21] We debate whether gold remains a safe haven or if it’s now overvalued in a volatile global economy.

[05:01] We preview key topics from What’s in the News including the RBA’s rate decision, the Nobel Prize in Economics, and global innovation rankings.

[05:44] Discussion begins on the Reserve Bank of Australia holding rates steady at 3.6% amid sticky inflation.

[07:54] Paul explains how tariff policies and inflation dynamics are complicating economic forecasts.

[10:13] He predicts stable interest rates for the remainder of the year, with only a slim chance of increases.

[11:08] The focus shifts to the Nobel Prize in Economic Sciences and its origins with Sweden’s central bank.

[13:29] They reveal this year’s winners: Joel Mokyr, Philippe Aghion, and Peter Howitt.

[15:10] Discussion of Mokyr’s research on linking scientific knowledge and technological progress to growth.

[16:22] Aghion and Howitt’s model of creative destruction and endogenous growth is explored in depth.

[18:39] Domenique and Paul compare the two approaches and their policy implications for innovation ecosystems.

[20:05] We transition to the Global Innovation Index released by the World Intellectual Property Organization (WIPO).

[21:14] Germany drops out of the top 10, replaced by China, sparking debate on innovation metrics.

[25:31] They reveal the top-ranking countries: Switzerland, Sweden, the US, South Korea, Singapore, and others.

[27:16] Australia ranks 22nd, reflecting its reliance on low-tech industries despite strong economic size.

[28:28] Domenique calls for more “creative destruction” to boost Australia’s innovation standing.

[28:43] In The Hand, the discussion turns to Russia’s war economy and its resilience under sanctions.

[31:36] Despite falling export revenues, oil production remains high with shadow trade and barter deals.

[36:00] Russia’s GDP slows from 6.2% to 1.1% as the war drags on, though unemployment stays low.

[38:25] Paul argues that both Russia and Ukraine face economic exhaustion in a prolonged war of attrition.

[40:22] In The Invisible, we explore Elon Musk’s claim that population collapse is civilization’s greatest threat.

[41:23] We discuss declining birth rates, aging populations, and the economic ripple effects of demographic change.

[42:00] Reflections on long-term sustainability, growth, and humanity’s capacity to adapt.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• The Reserve Bank of Australia (RBA)
• Nobel Prize in Economic Sciences
• WIPO Global Innovation Index

Australia’s economy is growing, but the gains aren’t keeping pace with the past. Domenique and Paul open with a sharp focus on stalled productivity growth and why it matters. Along with how it shapes living standards, and why it feels like today’s prosperity is being borrowed from tomorrow. From there, what’s in the news takes over. We discuss housing prices climbing for the sixth straight month with Darwin leading the charge, commodities bouncing around on tariff headlines, solar panels and home batteries taking off as energy bills keep rising, and Trump’s tariffs ruled illegal by a federal appeals court but still hanging in limbo until the Supreme Court decides.

With the headlines as backdrop, they turn to the hand that’s steering the bigger story: Australia’s productivity puzzle. Despite decades of growth, productivity has flatlined, and in some years even gone backwards. Domenique and Paul dig into why including slow adoption of new technology, a heavy reliance on mining, and government spending propping things up instead of real efficiency gains. The result is a gap with other economies that are moving faster, and GDP per capita that’s slipping instead of rising. They call it a kind of “intergenerational theft,” where today’s Australians are coasting on the work of earlier generations rather than building new strength for the future.

The conversation closes with the invisible connections between energy and housing. Homeowners are cashing in on rooftop solar and rebates, trimming bills and even selling power back to the grid. Renters are largely left out with less than 10% of rental properties having solar. They’re stuck shouldering higher energy costs with none of the upside. Domenique and Paul go back and forth on whether governments should give landlords stronger incentives to install panels, or whether the real fix is helping more renters become owners in the first place. Either way, it’s a clear example of how ownership, incentives, and policy end up deciding who gets ahead and who falls behind.

Episode Highlights: 

[00:06] Domenique and Paul open with protests, bridge closures, and a surprise story about Nauru’s costly deal with Australia.

[03:07] They outline the episode structure: what’s in the news, the hand on productivity, and the invisible link between housing and energy.

[03:44] Housing prices continue rising nationally, with Darwin up 2.2% and listings still down 20%.

[04:27] Commodity updates: iron ore up 6%, oil down 4.1%, copper whipsawed by U.S. tariffs.

[05:18] Rooftop solar now makes up 20% of Australia’s electricity, with battery installations up 62% year on year.

[07:04] Trump’s tariffs were ruled illegal by a federal appeals court but left in place pending Supreme Court review.

[08:36] The hand turns to Australia’s productivity puzzle, with stalled growth, weak tech adoption, and reliance on mining.

[13:32] Discussion of services, government spending, and how low productivity erodes wealth slowly over time.

[17:07] Tax reform flagged as the biggest lever to unlock productivity gains, though political will is lacking.

[19:40] Productivity explained as growing the pie with efficient sectors like mining, banking, and education.

[21:26] The invisible emerges in energy and housing, with one in three households now having rooftop solar.

[23:30] Less than 10% of rental properties have panels, while wealthier households capture most benefits.

[27:43] Debate over government incentives to push solar into rentals versus broader solutions to help renters buy.

[31:03] Broader fixes suggested: education, jobs, health, and housing supply to move renters into ownership.

[34:55] Closing thoughts on the government's role in providing core services like education, health, and safety.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• The Productivity Commission
• The Reserve Bank of Australia (RBA)

Domenique and Paul dig into the economic pressures shaping the world right now, kicking off with What’s in the News. They break down the Fed’s decision to hold interest rates at 4.5%, despite internal dissent and political pressure. With U.S. GDP bouncing back to 3% in Q2 and inflation holding at 2.7%, they look at how front-loaded imports to beat tariffs distorted the numbers—and why Jerome Powell is under fire once again.

The segment also covers Trump’s latest tariff hikes: Brazil gets hit with a jump from 10% to 50%, and India faces a new 25% rate over ties to Russian oil and arms. As a wildcard, the hosts turn to luxury giant Hermès, whose 9% sales increase and surge past LVMH in market cap says a lot about rising inequality and the power of capital in an inflationary world.

In The Hand, focus shifts to Australia, where the RBA also held its rate at 3.85%. Domenique and Paul unpack the meeting minutes, revealing a split board trying to weigh falling inflation against new global shocks. With unemployment still at record lows and job growth coming largely from the public sector, the RBA is stuck trying to make forward-looking decisions in a world that keeps shifting.

Finally, in The Invisible, they explore Southeast Asia’s rising role in the global AI race. With over two gigawatts of data center capacity, countries like Singapore and Malaysia are becoming a vital link between U.S. and Chinese tech ambitions. Billions are pouring in from Amazon, Microsoft, and Alphabet. While firms like Huawei and Alibaba quietly route around U.S. restrictions. It’s a clever move for global players and a missed opportunity for Australia.

Episode Highlights: 

[02:37] What's In The News: The FED kept the interest rate unchanged at 4.5%. The US economy grew at 3% in Q2.

[03:22] Jerome Powell is under a lot of political pressure.

[05:07] No one knows what to do with these unpredictable outcomes.

[06:10] Trump would still like the rates cut, and he raised tariffs on Brazil. He's also adding an additional 25% tariff on India.

[06:48] It's difficult for economists to make predictions that are based on political decisions.

[10:39] Hermès reported a 9% year-on-year sales increase in Q2. Driven by continued demand for their beautiful Birkin handbag.

[11:11] Increased consumption of high-end luxury goods when the cost of living is going up. What we are seeing around the world is the impact of inflation on wealth distribution.

[13:35] The Hand: The RBA surprised markets in July by holding the cash rate steady at 3.85%, despite widespread expectations of a cut. The RBA is treading carefully.

[14:53] They have a data-driven view, in spite of political pressure.

[15:49] The great challenge for rate decisions is that they affect the future.

[16:25] How the labor market fits in to this.

[18:31] The Federal Government workforce in Australia is going to expand.

[19:55] The Invisible: The burgeoning AI industry in Southeast Asia. Singapore's new Prime Minister, Lawrence Wong said that economic restrictions are futile in an interconnected world, while on a trip to China.

[21:13] Southeast Asia is the central hub for the global tech race between America and China.

[22:46] Singapore has created a great centrally planned economy.

[24:47] Singapore is walking on both sides of the fence with the US and China.

[25:50] How China is involving themselves in Southeast Asia to avoid US restrictions. Through Southeast Asia, China is able to get tech that they otherwise wouldn't be able to get.

[27:34] The US, China, and large tech companies are heavily investing in Southeast Asia.

[28:52] The US has pressured Malaysia to tighten export controls.

[30:04] How the US and China have different approaches when doing business in other countries.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"
• Odd Lots Podcast

What happens when political forecasts miss the mark, global rules evolve, and economic models don’t quite capture reality? In this episode, we dive into the major political and economic stories shaping Australia’s role on the world stage. Co-hosts Domenique Sherab and Paul Scanlon take you through a three-part format, delivering insightful analysis and grounded perspectives on the key forces driving markets and policy decisions.

We start by unpacking Australia’s recent federal election, where the Labor Party achieved a historic re-election while the Liberal campaign faced an unexpected and significant setback which caught many by surprise. Next, Domenique and Paul turn their attention to the U.S. lifting long-standing sanctions on Syria, exploring what this move might mean for the region’s recovery, trade opportunities, and shifting geopolitical dynamics.

Then our focus shifts to the Reserve Bank of Australia’s latest interest rate cut, highlighting the growing uncertainties in the global economy and the potential return of inflation amid changing trade landscapes.

Wrapping up, the conversation broadens to a global scale with Moody’s recent downgrade of the U.S. credit rating, ending its AAA status, and what this signals about fiscal trustworthiness and the evolving rules around sovereign debt. Throughout, Domenique and Paul bring a distinctly Australian viewpoint to help make sense of a fast-changing economic environment.

Episode Highlights: 

[00:57] Paul has recently returned from a holiday in South Africa and other African regions.

[01:28] We'll be discussing the new government in Australia, Syrian sanctions, the latest RBA cut, and Moody's downgrade of the US economy in our segments: "What's in the News?", "The Hand", and "The Invisible".

[02:06] What's in the news? The Australian election was on May 3rd. Anthony Albanese was re-elected. 

[03:52] We share our analysis of the election. 

[07:16] On May 12th, Donald Trump announced the US would lift sanctions on Syria.

[10:30] The speed or pace at which Syria can benefit from that re-entry into global trading markets will be dependent on the speed and ability for it to rebuild that trade and economic infrastructure.

[12:13] The hand: The RBA lowered rates last week.

[15:31] The preemptive cut to stimulate the economy is appropriate.

[16:27] How the rate cut will affect keeping inflation and unemployment rates stable.

[25:54] A big shout out to the Odd Lots podcast. 

[28:35] Paul talks about what all this analysis means for his January predictions.

[30:01] The invisible: On May 16th, 2025, Moody's downgraded the United States credit rating, making it the last major rating agency to strip the US of its AAA rating.

[31:54] Credit ratings are important and they affect the price of your debt.

[36:46] This debt issue is what Trump is trying to address.

[37:28] How many countries have AAA credit rating? There are 12 including Australia.

Resources & Links Related to this Episode

• The Invisible Hand Podcast
• Odd Lots Podcast
• The Butterfly Effect: How Your Life Matters

In episode 15, Domenique and Paul try to avoid talking about Trump's tariffs but end up doing it alot. In between, they discuss housing affordability in Australia and the major parties policy proposals to address this before the upcoming Australian election; and whether the Euro could ever become the global reserve currency. 

In this episode, Domenique and Paul throw out the plan for the episode to discuss the biggest economic news story of the day: the fall out from Trump's new tariff regime on the world.

In this episode, Domenique and Paul discuss Trump's tariffs and Chinese consumption, dive deep into the findings of the Knight Frank Wealth Report and consider the big economic risks for 2025. 

In the 12th episode, Domenique and Paul discuss the latest Australian inflation print and economic decisions coming from the new Trump administration. In the second section, we discuss Deepseek and how it is disrupting markets and whether this will have long term global and Australian economic impacts. In our final segment, we discuss the current financial malaise in China and some local factors contributing to this.