At a glance
Any conversation involving the economy is bound to involve a certain amount of jargon, which can be confusing for anyone who is not familiar with economic terminology.
It is no wonder then that experts often introduce simplified words or terms to explain complex concepts, sometimes with a humorous twist, that join the vernacular as buzzwords.
Here are six definitions for key buzzwords for 2024.
1. Swiftflation
It is rare for the world of pop music to intersect with economic theory, but that is exactly what happened when music star Taylor Swift set off on her Eras Tour.
The term “swiftflation” – interchangeable with “swiftonomics” – was born, giving a new generation of music fans a crash course in inflation.
Referring to the surge in economic activity that has accompanied Swift in each city she has toured, swiftflation describes how consumers splash out on expensive, fun experiences despite surging prices.
Dr Angel Zhong, associate professor of finance and interim head of the finance department at RMIT University, says the direct impact of Swift’s concert tour for the Australian economy was more than A$440 million, as a result of consumer spending around the event.
In Singapore, where more than 300,000 tickets were sold, economists opted to increase their GDP growth forecasts by 0.2 per cent – about US$200 million (A$298.44 million) due to the tour, according to Bloomberg. The Business Times reported a surge in hotel and flight prices for the week of 2 March to 9 March 2024.
Sweden experienced a similar phenomenon in 2023 – minus the buzzword – when fellow superstar Beyoncé toured and a 9.7 per cent surge in inflation occurred, as a result of her tour of the country.
“Swiftflation nicely explains another term, ‘substitution effect in consumer spending’,” Zhong says.
“It means people would rather make financial sacrifices in other areas in order to be able to afford going to concerts and other entertainment events.”
2. Shrinkflation
Continuing with the inflation theme, another term used to simplify the concept is “shrinkflation”.
Shrinkflation explains how a quantity of a product decreases while its price remains the same or even increases. Packets of chips, cereal boxes and cleaning products are some of the latest to feel the squeeze. According to Australian consumer advocacy group CHOICE, shrinkflation is a hidden form of inflation.
While it is not a new concept, concern about supermarket pricing and competition – including shrinkflation – has prompted the Australian Competition and Consumer Commission to launch the Supermarkets Inquiry 2024–25.
The term is used more often now because the shrinkage is occurring alongside increases in the cost of living, which is a hot topic for 2024.
“I think policymakers use terms like shrinkflation to open the conversation with people. Our brain cannot process everything we hear, so if you have something that is a buzzword, you can easily attract people’s attention,” Zhong says.
3. Real wage growth
Another cost-of-living relevant term is “real wage growth”, which describes the relationship between wages and inflation – something that Zhong says is “front of mind” for many people in 2024.
“If you get a pay rise of 2 per cent, and prices rise 1.5 per cent, you only got a ‘real’ pay rise of 0.5 per cent,” Zhong explains.
“Real wage growth is a term that really resonates with people, because, right now, many workers are experiencing wage growth at a lower rate than inflation,” Zhong says.
4. Wage-price spiral
If things were to go the other way with wages, workers could experience a “wage-price spiral”.
This buzzword is actually a macroeconomic theory. It explains the economic phenomenon where increases in wages lead to higher production costs for businesses, which are then passed on to consumers in the form of higher prices.
5. NAIRU
While it may not present as a buzzword, “NAIRU”, which stands for non-accelerating inflation rate of unemployment, is a term commonly used by central banks to explain unemployment and inflation.
NAIRU describes the unemployment rate at which the economy is considered to be at full employment, where any further reductions in unemployment are likely to lead to inflationary pressures – but whether or not NAIRU makes things clearer or complicates things further is debatable.
Zhong says NAIRU has been the dominant model for understanding the relationship between unemployment and inflation since the 1970s, but that recent economic events, such as the aftermath of the pandemic, have shown that a new approach is needed to manage unemployment and inflation.
“NAIRU is shorthand for a technical concept that requires some knowledge of economic policy – it is used by the Reserve Bank of Australia – but it may not be accessible for the average consumer in helping them understand how monetary policy is set,” Zhong says.
6. Polycrisis
It might have been coined in the 1970s, but the buzzword “polycrisis” remains relevant. As the world grapples with the escalating climate crisis, the Israeli-Palestine conflict, war in Ukraine, rising inflation, multiple extreme weather events and widespread social unease, having one word to sum it up can help focus the conversation.
That is because it means exactly what it says, Zhong says.
“Polycrisis illustrates how the occurrence of multiple crises can then exacerbate or magnify the economic, social, political and environmental impacts. It is simple, but it summarises so much that is happening,” she says.
