Dear Economist, Are You Living on Mars?
Dear Economist, Are You Living on Mars?
The unemployment rate reported today for March shocked economists. The consensus estimate was for a 5.4% rate, a mild uptick from 5.3% in February. The actual result – 5.7% – was significantly worse than expected. In human terms, this meant the number of people in full time work fell by 38,900 compared to the consensus estimate of 25,000.
I'm not sure what planet these consensus economists are living on. It should be no news flash that the Australian economy is rapidly deteriorating. You don’t need to wait for the numbers, just go and talk to a few people on the street. Redundancies continue apace across the commercial sector. Architects, investment bankers and recruiters were already in bad shape. And with the mining and construction sectors now laying off thousands of workers, the situation is becoming dire.
We’re not in the business of making specific economic forecasts at The Intelligent Investor, but it seems obvious to me that predictions of a gradual increase in unemployment are way off the mark. Investors expecting gentle changes in macroeconomic settings should revise their assumptions. Things are tough and getting tougher.
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I saw Steve Keen was referenced in the previous post, he's written another interesting article explaining the cause of the increasing unemployment at http://www.debtdeflation.com/blogs/2009/04/09/whod-a-thought-it-unemploy...
I know you guys aren't so macro focused but do you have any thoughts on his analysis?
Unemployment is rising fast but the hidden statistic is "under" employment which is rising even faster.
Steve ,I am 63 yo and when I was young it was a consensus view that 5% unemployment was the desired target to make the system work properly(the reality was that it was not the same 5%) but a revolving pool of people to fill vacancys as they evolved. the recent boom and mining company excesses have driven wages,real estate and living costs to levels beyond reality and sustainability,I live in the NT and we usually lag other states,there is little sign of recession here and people worth $50,000 pa are still getting over double that.,but we know this wont last . Tom Harbrow
Hey Steve,
I found your blog and thought it looked great and was very informative. I have a site (the site I have linked to from my comment) that is also about stock investing and I was wondering if you would like to do a link exchange? I couldn't find a contact form, so I thought I would just leave a comment.
Let me know, I think it would help us both!
Thanks,
Sam
All my friends are employed and the economy here is booming. Big city folks with bloated incomes seem to have taken a bit of a hit - just to remind them that money isn't what it's all about. The beach centres are full of tourists, campers, families and the wandering grey set and business is in full swing. Depends where you live, and where you look.
Like somebody said during the Great Depression, '" more than 75 % of the population are still employed "
There are 2 other statistics which have an economic effect:
1. if you are unemployed but have too much money & don't qualify for any benefits, I believe you're not counted as unemployed.
2. Some are moving from high-paid to lower-paid employment. I work in IT where I've seen people on 80 - 120k move to occupations (some non-IT) paying 40k - 50k or less, as IT jobs move overseas.
Regards, Paul.
[...] seems my economic forecasting capabilities are about as good as the rest of my fellow economists. The April unemployment rate fell to 5.4%! [...]
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