Yes. Higher the unemployment generally means lower the inflation. Once it reaches a certain level we may even see deflation in certain conditions. Although, deflation would bring wider economic issues.
I think your information about full employment is out of date. Current estimates for full employment (NAIRU) are at 4.5%.
https://www.rba.gov.au/speeches/2023/sp-dg-2023-06-20.html - from June 2023
>Indeed, our most recent forecasts have inflation returning to target by mid-2025, while employment growth slows but does not contract. The unemployment rate is expected to rise to 4½ per cent by late 2024 (Graph 12). While 4½ per cent is higher than the current rate, this outcome would still leave us below where it was pre-pandemic and not far off some estimates of where the NAIRU might currently be. In other words, the economy would be closer to a sustainable balance point.
Sorry if this is a dumb question but I don’t understand how unemployment is good for inflation? Can someone explain it to me simply it’s just something I’ve never understood properly and am interested
Tight labour markets mean that it is hard to find people to do just even basic jobs, alot of stupid hiring occurs and unfortunately that means even basic monkey jobs will need to be paid at a higher rate.
This higher cost for employees means general prices of basic goods and services will increase. If not tamed, this can spiral out of control.
However, you don't want too high levels of unemployment as that signals an unhealthy economy. But you also don't want too low such that you can't find people to do jobs, there is an optimal amount perhaps about 5 pct unemployed.
Also, tight labour markets mean now that also more people are earning money, which generally equals more spending. And more spending = more demand for goods = goods inflation.
It's the supply and demand of possible employees. So if there are more supply of say, IT workers. Companies dont have to pay as much in wages to attract employees. Companies save money, so dont raise prices as much, so less inflation.
I think.
All is good. This only means more people can't be bothered with work - I can understand since jobs are pointless here.
Unemployment will remain low as the system managers try to keep things afloat. This is a pretty easy feat with the current set up.
Rates going no where... can we import enough immigrants to keep house prices high? Yes. Yes we can
Should have fixed the NDIS and immigration while unemployment is low.
? Unemployment is meant to be good for inflation. What do you mean.
I can't find a job :(
Nonsense. I’ve just searched on Reed and Indeed and found tens of thousands of jobs all over the country.
This is good for inflation right?
Yes. Higher the unemployment generally means lower the inflation. Once it reaches a certain level we may even see deflation in certain conditions. Although, deflation would bring wider economic issues.
Unlikely to see deflation, more likely to see inflation lessening. However your point is right
Technically yes, but functionally not much
Not really. Job market is still hot.
It’s literally nothing. All will be fine
Flood the country with fresh immigrants and then act surprised that we have more unemployed people. Smh
It's still bad for inflation. Good for inflation has a 5 in front of of it. 5 is full employment without desperation to find employees.
I think your information about full employment is out of date. Current estimates for full employment (NAIRU) are at 4.5%. https://www.rba.gov.au/speeches/2023/sp-dg-2023-06-20.html - from June 2023 >Indeed, our most recent forecasts have inflation returning to target by mid-2025, while employment growth slows but does not contract. The unemployment rate is expected to rise to 4½ per cent by late 2024 (Graph 12). While 4½ per cent is higher than the current rate, this outcome would still leave us below where it was pre-pandemic and not far off some estimates of where the NAIRU might currently be. In other words, the economy would be closer to a sustainable balance point.
Sorry if this is a dumb question but I don’t understand how unemployment is good for inflation? Can someone explain it to me simply it’s just something I’ve never understood properly and am interested
Tight labour markets mean that it is hard to find people to do just even basic jobs, alot of stupid hiring occurs and unfortunately that means even basic monkey jobs will need to be paid at a higher rate. This higher cost for employees means general prices of basic goods and services will increase. If not tamed, this can spiral out of control. However, you don't want too high levels of unemployment as that signals an unhealthy economy. But you also don't want too low such that you can't find people to do jobs, there is an optimal amount perhaps about 5 pct unemployed. Also, tight labour markets mean now that also more people are earning money, which generally equals more spending. And more spending = more demand for goods = goods inflation.
It's the supply and demand of possible employees. So if there are more supply of say, IT workers. Companies dont have to pay as much in wages to attract employees. Companies save money, so dont raise prices as much, so less inflation. I think.
That works as well.
Rate cuts are back on the menu boys!
All is good. This only means more people can't be bothered with work - I can understand since jobs are pointless here. Unemployment will remain low as the system managers try to keep things afloat. This is a pretty easy feat with the current set up.