Abernethy: Targeting Unemployment While Real Wages Still Lag Risks a Recession

Abernethy: Targeting Unemployment While Real Wages Still Lag Risks a Recession

23000 Series — Scope & Inclusion Criteria

The Australian Property Network’s (APN’s) 23000 Series is the attributed opinion layer of the APN Codex. It presents the recorded perspective of an identified practitioner, academic or subject-matter expert whose observations bear on active node conditions, without constituting APN’s own analytical position. This perspective is drawn from a 22-minute weekly commentary recorded on 23 September 2026. APN extracts one segment, on the Reserve Bank, unemployment and real wages, because the board’s decision on 29 September turns on exactly this trade-off. The rest of the broadcast, on the Intergenerational Report, artificial intelligence and international affairs, is not reproduced. The speaker’s statements are presented as his own attributed analysis, not as verified fact.

Attributed Perspective — John Abernethy, Founder, Clime Investment Management

Abernethy’s starting point is the Governor’s own remark, made the day before, that higher unemployment would help bring inflation down. Speaking at a Committee for Economic Development of Australia event on 22 September, Governor Michele Bullock said an unemployment rate between 4.5 and 5 per cent would probably take enough heat out of the labour market to ease pressure on inflation (ABC News). Abernethy calls this an amazing statement from a central bank whose mandate includes full employment alongside price stability. He reads it as a statement that unemployment has to rise so that wages come down.

His objection is that wages have already fallen behind. In his words, “wage rates haven’t matched inflation” since COVID. He adds that productivity is the missing link.

His forecast is conditional on the rate path. Having read the forward markets over the weekend, he says professional pricing points to as many as three rate increases by early next year, which would take the cash rate towards 5 per cent. If that path is followed, his view is that Australia would enter a recession.

“I won’t say it’s catastrophic but I think it would send Australia into a recession.”

John Abernethy, on three further rate rises. Quoted in his own register; APN’s reframing follows below.

Source: John Abernethy, founder, Clime Investment Management, introduced in the broadcast as chair of the Clime Capital board. Video commentary — Clime Investment Management, The View (YouTube), “Recession Warning: Australia Could Be Heading for a Crash?”, recorded 23 September 2026, hosted by Managing Director Michael Baragwanath; segment from about 4:04 to 5:46. Retrieved 24 September 2026. Close paraphrase throughout, with short direct quotations as marked; the published recording is the authoritative record of exact wording. Context: Clime is a fund manager and the broadcast is its own channel. Commercial interests declared as a fund manager; holdings not independently verified.

APN Clinical Reframing

Abernethy’s segment contains three claims of different kinds, and they need to be kept apart. The first is a reading of the Governor: that the Bank now seeks higher unemployment. On the reported record this holds in substance. The Governor named a range of 4.5 to 5 per cent and, as reported, described how a labour market that is too tight puts upward pressure on wages and business costs that “finds its way into prices”. The Governor described easing the upward pressure on wages; Abernethy’s “to get wage rates down” is his stronger reading of it. Remarks in the broadcast attributing motives to the Governor beyond her stated reasoning are not reproduced.

The second claim, that wages have not kept pace with prices since COVID, is a statement about the published record, and it can be tested. The companion National Insight output finds that it holds over the period as a whole, with a two-year interval in which real wages recovered. The third, that three further rate rises would bring a recession, is a forecast. APN does not forecast, and the claim is presented as the speaker’s own conditional judgement. In the clinical register: the speaker judges that a cash rate near 5 per cent would bring a material contraction in activity. The language of the quoted remark is his own.

This perspective is an exploration candidate for Inflation (21220), Interest Rates (21210) and Employment & GDP (21230). The open question it raises is whether policy that works through the labour market can lower inflation that is being sustained by energy prices and weak productivity growth. No figure or characterisation in this piece may be treated as an APN-certified position for any 21000, 22000 or 24000 Series node.

Disclaimer

The analysis, information, and opinions contained in this article are for general informational and strategic purposes only and do not constitute financial, investment, legal, or any other form of professional advice. The Australian Property Network (APN) is a strategic intelligence organisation and is not a licensed financial advisor.

The views, thoughts, and opinions expressed in this text belong solely to the author and do not necessarily reflect the official policy or position of the Australian Property Network (APN).

This content may be based on data from third-party sources believed to be reliable; however, APN provides no warranty as to its accuracy, currency, or completeness. Images used are for illustrative and conceptual purposes only and may not represent real persons, properties, or events.

Property values and market conditions can go down as well as up. Before making any property or investment decisions, you must conduct your own thorough research and seek independent professional advice tailored to your specific circumstances.