Newcastle's economy, traditionally centered around heavy industry, faced numerous challenges due to economic downturns that affected both New South Wales and the broader Australian economy since the 1970s. The most notable of these occurred during the early 1990s recession, which hit the region particularly hard. At the height of this period, Newcastle's unemployment rate peaked at 17% in February 1993, well above the state and national averages.

The closure of the BHP steelworks in 1999 marked a major turning point for the city. After operating for 84 years and employing tens of thousands of workers, the steelworks’ closure was a blow to Newcastle's economy, especially during a time of strong national economic growth. However, this event led to a broader diversification of the local economy, laying the foundation for future prosperity.

From 2003 onwards, the Australian commodities boom, fueled by soaring coal and iron ore prices, brought new investment to Newcastle. As a major coal mining and export hub to Asian markets, the region benefitted greatly from increased demand for coal, which helped reduce unemployment and provided a buffer during the global financial crisis of the late 2000s. By 2009, two of the region's largest employers were the Hunter New England Area Health Service and the University of Newcastle, showcasing the shift from traditional heavy industries to the health and education sectors.

Newcastle's economy has a rich history rooted in industries like coal mining, copper smelting, and soap production. The Australian Agricultural Company began coal mining operations in 1833, securing Newcastle's place as a crucial coal-export hub. The region was also home to Australia's first railway, established in 1831, which served to transport coal. The copper industry gained prominence in the mid-1800s with major smelting works opening in Burwood and Broadmeadow. Additionally, a large soap factory established in 1885 became the Southern Hemisphere's largest of its kind before being sold and ultimately closing in the 1930s.

Steel played a central role in the city's industrial growth. In 1911, BHP chose Newcastle for its steelworks, benefiting from its proximity to coal supplies. The steelworks, which began operations in 1915, dominated the local economy for nearly 80 years, providing jobs to thousands and contributing to the city's growth. However, as surrounding areas like Mayfield experienced decline due to pollution from the steelworks, Newcastle’s economy continued to evolve, and heavy industry gradually gave way to other sectors.

Today, Newcastle is a thriving regional economy that continues to adapt to global changes, with a focus on diversification, education, healthcare, and energy, while still benefiting from its historical ties to coal.