US labour market slower but relative to what?

In last month’s US labour market briefing – US labour market – stability abounds although, worryingly, real wage gains have evaporated (October 9, 2023) – I noted that while there was no major slowdown signalled, the real wage gains made in previous months had evaporated. I wasn’t sure whether that was a sign that a tipping point had been reached or was near. Last Friday (November 3, 2023), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – October 2023 – which showed payroll employment rising by just 150,000, a significant dip in the previous month’s increase. The unemployment rate also continued to creep up to 3.9 per cent (from 3.8 per cent). While some might interpret this as a weakening trend, the question should be asked about the appropriate benchmark that we should be using. One could easily conclude that the aggregates are returning to pre-pandemic levels after all the pandemic noise. The alternative view is that there is a slowdown occurring. We will have to wait another month or so to distinguish between these two conjectures. After a few months of real wage gains, we are now observing nominal wages growth trailing the moderating inflation rate.

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Latest IMF report on Australia is food for uncritical and lazy journalists but garbage nonetheless

The IMF regularly conduct ‘missions’ to member countries, where a group of highly paid economists trot out to a capital city somewhere, hole up in some luxury hotel, and have a few meetings with Treasury officials and the like and then shoot through after the short visit back to whence they came and produce their report. On October 31, 2023, the IMF published – Australia: Staff Concluding Statement of the 2023 Article IV Mission – which attracted a lot of mainstream press attention in Australia. The message that the public received was summarised in this article – International Monetary Fund says Australia needs higher interest rates. The article carried no qualifications or reflection on the methodology. The journalists who have a high profile in the mainstream national media sanctioned without question the IMFs conclusions. That is what goes for information in these times. It is an assault on our collective intelligence really.

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Video conversation – Seeking Full Employment Without Falling Prey to Neoliberal Traps

Given I wrote a detailed CPI analysis yesterday (Wednesday), I am using today as if it was my Wednesday post where I cover a range of topics. I was criticised on social media last week for combining in last Wednesday’s post – Launching the CofFEE Financial Resilience Barometer – Version 1.0 (October 18, 2023) – scientific material (the research project results) with commentary on the current situation in the Middle East (and music etc). I was accused of trying to drum up traffic to the research site by including an unrelated discussion on a topical matter (the situation). The point is that in my usual Wednesday post I just roam free and write about all manner of topics that I have thought about in the previous week and which I don’t want to devote a full post too. I don’t play games such as clickbait etc. Anyway, today, I promote a video of a long interview I did in September that has just been released, talk about some framing issues and provide the usual musical segment to calm us all down.

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Australian labour market – slight weakening in September as hidden unemployment rises

The Australian Bureau of Statistics released the latest – Labour Force, Australia – for September 2023 today (October 19, 2023). My overall assessment is that the the labour market is now looking subdued although relatively stable. The decline in full-time employment is a worry. Almost all the net change in employment over the last six months has been part-time. In September, employment growth was not strong enough to absorb the underlying population growth. The only reason unemployment fell in the context of the weak employment growth was because the fall in the participation rate meant more workers left the labour force. There are now 9.9 per cent of the available and willing working age population who are being wasted in one way or another – either unemployed or underemployed. The fact that the broad underutlisation rate fell is not a cause for celebration because it was driven by the decline in participation, which just means hidden unemployment rose. Australia is not near full employment despite the claims by the mainstream commentators.

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Australia’s new White Paper on Full Employment is a dud and just reinforces the failed NAIRU cult

Today (September 25, 2023), the Australian government issued its – Working Future: The Australian Government’s White Paper on Jobs and Opportunities – statement, which portends to define labour market vision and policy for the years to come. White Paper’s are grand statement and this one falls short of that requirement. Compared to the path-breaking – The 1945 White Paper on Full Employment – which set the path for several decades of prosperity for workers, the current effort by the government is a mediocre affair. It is just a restatement of the NAIRU cult that has justified the so-called ‘activation’ or supply-side approach to labour market policy, which effectively relegates macroeconomic policy to the bench and considers micro policies are required to reduce the NAIRU and the measured unemployment rate. This is the failed strategy that has dominated for the last three decades and has cause the problems that the White Paper claims it wants to address. Its release today demonstrates that the Labor Government is really just a neoliberal-lite outfit – full of spin but short on any directional shift in policy. It is very dispiriting.

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Claiming the European Union is close to full employment defies the meaning of language

Last week (September 13, 2023) in Brussels, the President of the European Union delivered her annual – 2023 State of the Union Address. We all know that these events are spin-oriented and the leader of the 27-nation bloc is hardly going to come out and talk the arrangement down. But this was an election speech – with the next major elections coming in the year ahead. The President lauded all the half-baked and under-funded programs that they have initiated under her ‘leadership’ and when it came to assessing the state of the labour market she made the extraordinary statement that as a result of Commission policies (such as – SURE) “Europe is close to full employment.” Yes, they are spinning the view that the problem is not a lack of jobs but “millions of jobs are looking for people” while admitting that “8 million young people are neither in employment, education or training” – the so-called NEET generation. Language should above all else convey meaning. Trying to claim that Europe is close to full employment violates that basic aspiration. The reality is that Europe is nowhere close.

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Australian labour market – stronger employment growth in August demonstrates how ineffective monetary policy is

Today, the Australian Bureau of Statistics released the latest – Labour Force, Australia – for August 2023 today (September 14, 2023). Employment growth was strong in August and kept pace with the underlying population growth and the participation rise so that unemployment remained steady. The weaker result in July was probably mostly reflecting the rotation in the sample. However, there are now 10.2 per cent of the available and willing working age population who are being wasted in one way or another – either unemployed or underemployed. That extent of idle labour means Australia is not at full employment despite the claims by the mainstream commentators. The other point is that the relatively steady unemployment rate indicates how ineffective monetary policy has been, given the RBA’s intention to push unemployment up to 4.5 per cent through a sequence of interest rate rises since May 2022. Unemployment has barely budged.

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Capitalist wants government to drive up unemployment by 40-50 per cent and inflict more ‘pain in the economy’ on workers

Two items this Wednesday before the music segment. First, we saw the stark ideology of the elites on full display in Sydney yesterday with a property developer demanding the government increase unemployment by 40-50 per cent to show the workers that the employer is boss and redistribute more national income back to profits. For anyone who doubts the relevance of a framework based on underlying class conflict between labour and capital, then this outburst should eliminate those doubts. On the same day, a leading research group in the welfare sector released an update in their series tracing poverty in Australia. It demonstrated a rising incidence of poverty (nearly 20 per cent of the population) and 1 in 6 children living in impoverished conditions. And the profit takers want more of that to enrich (engorge) themselves even further. A shocking indictment of what has gone wrong with this nation.

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US labour market – unemployment rises on back of rising participation rate

Last Friday (September 1, 2023), the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – August 2023 – which showed payroll employment rising by 187,000 but also that the unemployment rate has now starting rising (up 0.3 points) to 3.8 per cent. Is this the tipping point? I am very uncertain given the surprisingly large burst in participation which accounts almost entirely for the rise in unemployment and the unemployment rate. Most of the other aggregates were relatively stable which is why I am expressing uncertainty in my assessment. However, there is no sign of recession and no sign that the misguided Federal Reserve interest rate rises are causing rises in unemployment. Powell could hardly take credit for the rising participation rate unless he argued that he had created such desperation that people who normally do not work sought work. A stretch!

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Inflation in Australia falling sharply while the US labour demand collapses

Yesterday (August 29, 2023), the incoming Reserve Bank of Australia governor was confronted with ‘activists’ as she prepared to present to an audience at the Australian National University in Canberra. They presented her with an application for unemployment benefits and had done her the favour of already filling it in with her name. It was in response to her dreadful speech in June where she said the RBA was intent on pushing the unemployment rate up to 4.5 per cent (from 3.5), which means that around 140,000 workers will be forced out of work. The problem is that even if we believed the logic underpinning such an aspiration, the actual empirical evidence doesn’t support the conclusion. Today August 30, 2023, we received more evidence of that as the Australian Bureau of Statistics (ABS) released the latest – Monthly Consumer Price Index Indicator – for July 2023, which showed a sharp drop in inflation. As well as considering that data, today I reflect on the latest JOLTS data that was released by the US Bureau of Labor Statistics yesterday. The two considerations are complementary and demonstrate that central bankers in Australia and the US have lost the plot. To soothe our souls after all that we remember a great musician who died recently.

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