The Australian Dollar looked rather uncertain for a time on the prediction of an imminent unemployment number and subsequent spillover. Since that time, that oil price has fallen to what we call below the “oil shock level” where it might become unprofitable for the Australian Dollar to fluctuate wildly. Will that also pave the way for a far more stable Australian Dollar?
That is what I thought after watching the Sydney Morning Herald reports the unofficial jobless figure released by Statistics Australia as a gross domestic product (GDP) measurement and not just a “revenue”. And what about that minister Nick Minchin’s statement in Parliament this morning, telling us that the figures are likely to be slightly higher because there is an undeclared ‘under-employment’ category.
The first part of Minister Minchin’s statement is true but, on closer examination, he could have said that the figures were likely to be slightly lower due to under-employment. Under-employment, at least as measured by GDP, is a different thing from under-employment because in Australia there is no meaningful distinction between the two and the employment-to-population ratio shows this.
The second statement, “we are going to need some extra labour from overseas”, is also fair enough, if only because the unemployment rate in the world today is certainly not in the same league as the unemployment rate in the early 1970s. We can probably expect an additional 200,000 Australians looking for work during the next twelve months and possibly even more.
The official jobless numbers were presented with a disclaimer, saying the figures would continue to be adjusted as necessary, but I wondered if it was the same thing in other countries. The unemployment figures in Norway are also now released in US dollars because the country is no longer part of the European Union.
In those countries, there is no such thing as an official jobless count, or wages, or even crude oil prices, which are often used to gauge inflation. As a result, it appears that oil prices will account for quite a bit of the impact on the Australian Dollar.
In fact, there is no reason for anyone to read regular headline economic reports or financial statements. As I write this, I’m off to lunch and, for the next few days, I will not be looking at balance sheets, earnings per share, or the change in cash flows. I’ll just carry on living.
Of course, the United States Federal Reserve Bank has plenty of work to do and it may take years to fix its monetary policy problem. But, the fiscal problems we are facing today will affect the world economy for many years. At some point, the current state of affairs will have to be addressed, as will the ongoing Federal Government deficit.
Indeed, I worry about this because, just as the United States once had fiscal problems, so too does Canada, and that is reflected in our present strength. And just as the United States went through a period when it was very strong and we were called a debtor’s nation, so too will our economy be stronger than we can ever hope to be. As I look around, I see opportunities for young people in all parts of the world.
They are all eager to secure their futures and they know that this will be best achieved by working today and tomorrow because tomorrow is not yet here. When one nation’s fiscal policy is better balanced than another nation’s, it’s safe to say that the former is heading towards a much more prosperous future than the latter.
Even before the world experienced today’s economic stimulus package, they were moving in that direction. And, when I look at the numbers, I see a future that looks far brighter than the one I imagined for today’s world.
Indeed, the story today is that the country is going to be buoyed by this phenomenon and rapid economic growth throughout the year, but, as I see it, there is much potential for even more prosperity to come. in the years ahead.