The jobs data remain glum

Fri, 14 Apr 2017  |  

Despite the hoopla that greeted the labour force data which showed employment up 60,000 in March, the labour market, and with it the economy, remain entrenched in a quagmire of funk.

To be sure, the 60,000 rise in employment was welcome, but that jobs growth needs to be put in context of the prior months of disappointingly weak job creation. Annual employment growth remains under 1 per cent which is well below the run rate needed to make inroads into unemployment.

Speaking of which – the unemployment rate stayed at a high 5.9 per cent in March. It is at least 1 percentage point higher than the rate seen when the economy is running at full employment. And interestingly, 5.9 per cent is the same rate that prevailed at the peak of the global crisis!

From a macroeconomic management perspective, the 750,000 people unemployed are a huge resource, untapped and unproductive. Many have limited or depreciating skills. Yet the government wants to make it harder for people to get additional skills, training and education. It is content to have the economy slothfully meander while it focuses on fourth tier policy issues.

The social costs of unemployment are even greater.

There are few signs of better economic times ahead. The commodity price lift is rapidly reversing. The housing boom appears to be on the cusp of something that could turn ugly. Wages growth is so low that the prospects for an acceleration in consumer spending growth is remote.

Where is the segment of the economy that will kick start GDP growth to a much needed 3 to 3.5 per cent? What are the policy makers doing to try to make this happen?

Unless there is something miraculous in the budget, get set for the unemployment rate to break above 6 per cent in the next few months and for the number of unemployed to excess 800,000.

As a mark of economic management, such results confirm policy failure.

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THE LATEST FROM THE KOUK

The Australian stock market is a global dog.

Sat, 24 Jun 2017

This article first appeared on the Yahoo7 web page at this link: https://au.finance.yahoo.com/news/1381246-234254873.html 

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The Australian stock market is a global dog.

At a time when stock markets in the big, industrialised countries are zooming to record high after record high, the ASX200 index is going no where. So poor has the performance been that the ASX is around 20 per cent below the level prevailing in 2008.

It is a picture most evident in the last few years. Since the middle of 2013, the ASX 200 has risen by just 10 per cent. The US stock market, by contrast, has risen by 50 per cent, in Germany the rise has been 55 per cent, in Canada the rise has been 20 per cent, in Japan the rise has been 45 per cent while in the UK, with all its troubles, the rise has been 15 per cent.

So what has gone wrong?

Tony Abbott and debt

Fri, 16 Jun 2017

With Tony Abbott and governemnt debt hot news topics at the moment, I thought I would repost this artricle which I wrote in April 2013:

Enjoy, SK

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Here’s a true story. It’s about a man called Tony.

Tony is a hard working Aussie, doing his best to provide for his family. He has a good job, but such is the nature of his work that his income is subject to unpredictable, sharp and sudden changes.

Tony’s much loved and wonderful children go to a private school and wow, those fees that he choses to pay are high. He used to have a moderate mortgage, especially given he was doing well with an income well over $200,000 per annum.

Then things on the income side turned sour.

Tony had a change in work status that resulted in his annual income dropping by around $90,000 – a big loss in anyone’s language.

How did Tony respond to this 40 per cent drop in income?

Well, rather than selling the house and moving into smaller, more affordable premises, or taking his children out of the private school system and saving tens of thousands of after tax dollars, Tony called up his friendly mortgage provider and refinanced his mortgage.

In other words, Tony took on a huge chunk of extra debt so that he could maintain his family’s lifestyle. No belt tightening, no attempt to live within his means, just more debt.