The economic equivalent of hiding under the table
More data today suggest the national economy is in a holding pattern. More than 21,000 people found themselves out of work in June, a rise of just 0.1 of a percentage point in the national unemployment figure.
The Reserve Bank cut interest rates to 3 per cent in April and hasn’t budged them since. And this week the Fair Pay Commission, in defiance of the government and unions, effectively gave low-income earners a pay cut when it froze the minimum wage. The commission argued that it would cost jobs and, as Clive Mathieson pointed out this week, jobless people can’t help the economy as they have zero money to spend.
These consumer sentiment figures show that significantly more Australians are feeling upbeat rather than gloomy about the economy. This is despite a range of forecasts - from banks and the federal government - predicting significant job losses over the coming year.
The unemployment figure today was 5.8 per cent. The crystal ball-gazers say it’s heading for around 8 per cent. Clive also pointed out recently that economists’ predictions are often useless and change tack with the economic winds.
There may yet be some nasty surprises as cuts in business budgets for the new financial year, which started just eight days ago, start to bite. Today, though, I’d like to ask where you think the economy is heading over the next six months. Are we out of the woods yet?
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