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Economist tips 11% jobless rate by 2010
Hey all, I just read this recently:
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Australia's jobs market is in for a rocky ride over the next two years, with one economist predicting the unemployment rate rising as high as 11 per cent, while others have a more sanguine view.
Many economists think the federal government's $10.4 billion fiscal stimulus package and still strong Chinese economic growth would give Australia some protection from an expected global economic recession.
However, all agree jobs will be lost, as consumers struggle to pay off their debt burden.
The best case scenario is for a jobless rate of 11 per cent by 2010, according to a Sydney academic who has also forecast official interest rates falling to zero over the same time frame.
But on a worst case basis, University of Western Sydney associate professor of economics and finance Steve Keen says one in five people could be out of work by 2010, as sky-high household debt levels weigh on demand.
That would be the highest level since the Great Depression almost 80 years ago, when the jobless rate peaked at 29 per cent.
"That would be a worse-case scenario ... I hope it doesn't hit that level," Dr Keen said.
"It could be worse than the Great Depression but I hope not.
"This is a far bigger crisis than the 1990 recession and a far bigger level of debt."
Australia's unemployment rate stood at 11.1 per cent in 1929, at the start of the Great Depression.
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What does everyone think about this? Is this possible? I have a feeling it will get ugly, but not this ugly!
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Australia's jobs market is in for a rocky ride over the next two years, with one economist predicting the unemployment rate rising as high as 11 per cent, while others have a more sanguine view.
Many economists think the federal government's $10.4 billion fiscal stimulus package and still strong Chinese economic growth would give Australia some protection from an expected global economic recession.
However, all agree jobs will be lost, as consumers struggle to pay off their debt burden.
The best case scenario is for a jobless rate of 11 per cent by 2010, according to a Sydney academic who has also forecast official interest rates falling to zero over the same time frame.
But on a worst case basis, University of Western Sydney associate professor of economics and finance Steve Keen says one in five people could be out of work by 2010, as sky-high household debt levels weigh on demand.
That would be the highest level since the Great Depression almost 80 years ago, when the jobless rate peaked at 29 per cent.
"That would be a worse-case scenario ... I hope it doesn't hit that level," Dr Keen said.
"It could be worse than the Great Depression but I hope not.
"This is a far bigger crisis than the 1990 recession and a far bigger level of debt."
Australia's unemployment rate stood at 11.1 per cent in 1929, at the start of the Great Depression.
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What does everyone think about this? Is this possible? I have a feeling it will get ugly, but not this ugly!
Views: 0
Replies to This Discussion
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Permalink Reply by Jim on -
I do not think that anyone knows how far or how long the crisis will last There are conflicting opinions out there in finance land and a lot of scaremongering by some parts of the media. Our government has come up with a lifebuoy but we don't know how strong the rope will be when we start pulling it in.I think that a whole lot of greedy people plus circumstances have given us a challenging time ahead.Another part of the equation is the fact that too many people asked for and were granted debt that they couldn't really afford.The plan should be to work on fixing the problems,not just bandaiding,and making sure that the incompetent are weeded out.Preferably without the usual over payment of bonuses ,whether cash or shares.
One thing that life has taught me is that worrying about a prediciment doesn't solve it.We need to do whatever we think is best in our individual situations,with the help of our advisors ,but only if they have shown good judgement before hand.The alternative,and this is my thinking at the moment,is to sit and do nothing as the only way through is for a turnaround in the share markets and a reduction of debt.
My amateurish advice would be to do nothing in haste nor be paniced into rash decisions.Also if you do have cash in abundance then look for opportunities to expand your horizons.
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Permalink Reply by Bandwidth on -
Hello Jim
Great advice and well written reply.
Take out the worry, take out the stress
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Permalink Reply by Manish Dev on -
Very true Bandwidth - Jim is spot on.
"One thing that life has taught me is that worrying about a prediciment doesn't solve it."
I think this part of what Jim wrote says it all. The focus for all of us should be on the solutions for us, not the problems for the world or the economy.
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Permalink Reply by Bandwidth on
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The serenity prayer
Grant me the serenuity to accept the things I cannot change, courage to change the things I can and the wisdom to know the difference
Said another way
Give me the strength to change the things I can
The resolve to live with the things I cannot change
And the wisdom to know which is which
Another expression that is common in the share trading game is "panic is what causes to stare at the headlights and become roadkill"
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Permalink Reply by Bytta on -
all i know is, the people who (in the beginning of the year) said that ASX 200 would hit 7000 by the end of 2008 are the same people who NOW predicted that the sharemarket will plunge further.
And who else said about AUD/USD would reach parity a few months ago?? yeah right.
so... i'm no expert... but listening to so called "experts" is just going to make my day worse.
I tune out of all doom and gloom theory for the sake of my sanity.
ps. most of them dont know what they are talking about and are probably only after the cheap 15-second-spotlight
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Permalink Reply by Mary M on -
I see where you're coming from Bytta, but the nature of forecasting is that they'll often get it wrong, as there are so many unknown factors in the mix.
While I don't accept everything I hear from "experts" as gospel, I also don't ignore them completely. There are some good minds out there who we can all learn from!
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