Ecocommentariat’ line-up to reject 60 Minutes story, Australia’s unemployment rate remains unchanged at a near six-year low and we give a moment to the RBA minutes.

 

Bricks and slaughter ... really?

 ‘We’ve got a debt bomb, a debt crisis, and, at some point, it’s going to explode in our face’, claimed Data Analytics founder Martin North on 60 Minutes last week.

Apparently, ‘household debt, compounded by sliding prices in Sydney and Melbourne, would cause house prices to fall 40–45% in the next 12 months’.

Dire predictions indeed. But Mr North has since claimed that 60 Minutes cherry-picked his information to suit the story, and the 40% house price fall was a ‘doomsday’ scenario.

‘I put the probability of this at 20%’, said North in response.

If the doomsday scenario played out, North reasoned that unemployment would hit 9% and the cash rate would drop to 0-0.5%.

The ‘ecocommentariat’ have lined-up to reject his outlook, with the consensus landing at a 10–15% Australia-wide price decline over the next few years, although this may be more likely in major cities.

Unemployment rate steady

Australia’s unemployment rate remains unchanged, at a near six-year low of 5.3%. However, delving deeper into the data reveals a drop in the under-employment rate, with the number of people who work casual or part-time but want full-time work down 0.3% to 8.1%. This is good news because it reflects a market that is gradually absorbing excess supply. And, following the classic rules of supply and demand, this will grow job opportunities and lead to the long-awaited, and now almost mythical, reality of wage growth. This matters because real wage growth puts real money in people’s pockets, which stokes inflation and panics the RBA into bumping-up rates. Monetary policy in a nutshell.

A moment with RBA minutes

RBA minutes from last month’s meeting indicate the cash rate will stay at 1.5% for the short-term. That’s based on strong worldwide growth levels despite escalating trade tensions. RBA also cited great conditions for Australian businesses, a falling unemployment rate, and a slowing housing market that indicate the ‘current strategy will continue to support economic growth’. In other words, move along, nothing to see here … for now.


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