Despite all of us commentators clutching at straws in recent weeks looking for good messages in each new data release (for example, yesterday’s consumer sentiment data), today’s ABS Labour Force data confirms the worst. The Australian labour market is contracting fast and is now outstripping the rate at which the US labour market is deteriorating. The overall unemployment rate rose a further 0.5 per cent in March to 5.7 per cent, meaning it has risen 1.2 per cent in the first three months of this year. The dream states of Western Australia and Queensland, which had enjoyed the commodities boom bounty while the rest of us slowed, are now looking significantly sick. The speed of this decline is now faster than the early stages of the 1982 and 1991 recessions. It is time the Government ramped up its new Jobs Plan to really stop this before it escalates further.

I was asked by a journalist today to comment on employment trends in the public sector. I was also thinking about the statement made at the G20 meeting which has been reiterated by our Prime Minister – we will do whatever is necessary! Well what is necessary is a massive upscaling of public sector employment. The best place to start would be to offer employment at the minimum wage to anyone who wants a job and cannot find one. However, this week’s news about the revamped job-seeking program, Job Services Australia which appears to be the Australian government’s centrepiece employment strategy tells me that our Government, at least, is lying about being prepared to do what is necessary.

I received a call from a journalist at the Financial Review today asking how the Federal government could afford to run labour market programs given that it might suffer a substantial revenue loss if it cuts back net migration. I told him that irrespective of what happens to net migration and any losses to tax revenue that that might bring (should they cut it back), the Government will always be able to fund any labour market program if it thought that was the best use of its funds. It brings to mind a new theme in this period of turmoil – how can the government keep its programs going while at the same time bailing out all and sundry? Answer: easy, just keep funding them. The national government is not financially constrained and the size of its budget is nothing that can be determined independent of the shortfall of aggregate demand.

The US Government has come up with its latest plan to solve the financial crisis which has now well and truly become a real (GDP and employment) crisis. While the initial reaction from the financial markets is generally favourable (and why wouldn’t it be), if you appraise it from the perspective of modern monetary theory and impose an equity bias then you conclude: (a) it will represent a major redistribution of nominal wealth to the already wealthy; and (b) it probably won’t help reduce unemployment because it is not tackling the real problem.

The US President appeared on the US commercial television show 60 minutes program on March 22. He was talking about about the AIG debacle, the economy, and his first challenges in his new job. His responses to questions about the economy though were positively scary. The most powerful man in the World and he doesn’t understand how the modern monetary economy works. Very scary indeed.

A document was leaked from the Australian Bureau of Statistics which showed it is planning to sack around 200 staff to pursue efficiency dividends to allow a pay rise to occur. I was interviewed by ABC economics commentator Stephen Long as part of a segment he put together on the national ABC current affairs show PM tonight which examined this issue.