<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Two interest rate cuts are on the horizon, but they won't stop Australians from tightening their belts during another challenging year for the economy.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>That's according to a new Oxford Economics report, which is forecasting weak employment growth and lethargic business investment will weigh on the nation's financial health – although the Australian economy is still predicted to perform better than other developed nations.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The research found that, while household spending has enjoyed something of a resurgence this year, much of it was driven by temporary factors like the back-to-back Easter and Anzac Day public holidays and generous shopping discounts, which won't last into 2026.</span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/world/iran-australia-sardar-amar-israel-benjamin-netanyahu/97399c0b-24da-4610-bf6a-84360867772b"><strong><span>Israel names man it believes is behind surge of antisemitic attacks in Australia</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"While recent data shows the economy is strengthening, the outlook is patchy," report author Harry Murphy Cruise said. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"As temporary boosts to household spending fade, unemployment edges higher, and real wage gains moderate, consumers will likely tighten their belts again…</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"That spending momentum will fade with those temporary boosts in the rearview mirror.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/finance/australia-economy-2026-outlook-oxford-economics-report/5fec4592-2192-49a6-b46b-97d50a12d858" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Meanwhile, households' appetite to spend will be Ozempic-ed as unemployment edges higher, real wage gains moderate and global uncertainty clouds the outlook."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/microsoft-australia-365-personal-and-family-plans-australian-competition-and-consumer-commission-federal-court-action/47a2864d-78f4-4413-9b6c-f59fc9fddb85"><strong><span>Microsoft Australia allegedly misled millions of Aussies to buy more expensive plan: watchdog</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Household aren't expected to regain their full confidence until the end of next year or early 2025, according to the report.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Murphy Cruise added that challenging conditions for businesses will keep unemployment at around its current level of 4.5 per cent for much of the next 12 months.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Businesses have been burnt by escalating costs and tariff uncertainty, so firms are sitting on their hands," he said. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Investment intentions are being rapidly scaled back, and employment has barely budged over the last four months. The unemployment rate hasn't reflected the full extent of this weakness – but it will soon.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Young people are the first to feel the impacts of a slowing labour market; so, with youth unemployment jumping sharply in recent months, we can expect to see that pain spread to other cohorts soon."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/reported-crocodile-attack-cape-tribulation-queensland/fdfb525f-8907-4195-a398-278a0744facc"><strong><span>Boy in hospital after reported Queensland crocodile attack</span></strong></a><strong><span></span></strong></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>But in a glimmer of good news for Australians still struggling with the cost of living after years of high inflation, Oxford is forecasting that the Reserve Bank will pull the trigger on what would be the fourth interest rate cut of the year next week, with another to come in early 2026.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"we are still confident that inflation will trend lower through the remainder of the year," Murphy Cruise said. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We expect trimmed mean inflation – the measure of most importance to the RBA – to end the year at 2.5 per cent. That should allow for two more rate cuts this cycle."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><a href="https://www.9news.com.au/national/how-to-follow-9news-digital/29855bb1-ad3d-4c38-bc25-3cb52af1216f" target="_blank"><strong><em><span>DOWNLOAD THE 9NEWS APP</span></em></strong></a><strong><em><span>:</span></em></strong><span> </span><em><strong><span>Stay across all the latest in breaking news, sport, politics and the weather via our news app and get notifications sent straight to your smartphone. 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