Not a lot of new economic data out this week, except for the Reserve Bank Board minutes from their December meeting which decided to keep interest rates on hold.
What was interesting in the minutes was a growing awareness of a change in the jobs market and the prospect of it rapidly deteriorating.
The RBA minutes noted “the case to hold the cash rate target constant reflected the view that the data over the prior month did not warrant a material revision to the outlook and that there is the possibility of a larger rise in the unemployment rate than anticipated.”
The 0.3 per cent increase in the unemployment rate over the last three months to 3.9 per cent in November seems to be a concern. While we’ve had high inflation and rapidly rising interest rates, at least everyone has had a job – which means a steady income stream to fight the financial stresses.
If that reverses and unemployment rises faster and more than forecast, the extra strain on consumers and their household budgets will be intense. It will likely push the economy into recession.
According to a Resolve poll for Dye & Durham’s Australian Market Pulse, nearly 60 per cent of Australians believe the economy is either already in recession or will tip into one in 2024.
Half of households believe they are financially worse off than a year earlier, a third predict their situation will deteriorate over the coming 12 months, while a quarter of respondents say they are optimistic their financial situation will improve in the coming year.
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