Taken together, these cash savings and net wealth increases will provide a buffer for households until the economy gets on a more even footing. So while the current squeeze on the household budget is tough, the hope – no, expectation – is that people will lean on these savings and build-up in wealth to support spending until inflation moderates, wages lift and hopefully productivity too. Remember it is productivity gains that deliver a sustained rise in real wages.

And these savings buffers – together with continuing elevated commodity prices – is why, at least in my opinion, a recession is a low probability for Australia.

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Growth will slow – it may even halve from last year’s 4.2 per cent rate – and price pressures, even if all goes well, will take time to moderate while wages are taking time to lift. So, it’s not going to be easy, but we’re not likely to hit a brick-wall either.

For me, the key is jobs. Jobs are how we feel a recession – it’s not through GDP data, it’s when we lose a job, the person we rely on loses a job or our neighbour or colleague loses their job and that leaves us feeling insecure. While the technical definition of a recession is two consecutive quarters of economic contraction, many economists, myself included, prefer a broader definition that includes an increase in unemployment.

All the leading indicators suggest the economy will continue creating jobs and the unemployment rate can remain around current levels. Job vacancies are 186 per cent higher than pre-pandemic, and there are now seven job vacancies for every 10 unemployed people, compared to three before the pandemic. The latest ABS business survey revealed that around one-third of all firms surveyed expected to increase staff numbers and wages in the next three months.

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I don’t want to downplay the economic challenges and risks to the economy. The Reserve Bank governor described only a “narrow path” to moderate inflation without triggering an economic downturn. There’s a fine line between things going wrong or going right and we, as individuals, have a role to play because if we get stuck in an inflationary mindset we could see a wage-inflation spiral. That’s not an economic outcome that anyone wants.