Captain Phil continues down his new path with gusto today:
Recent economic and financial developments
Last week we received further confirmation that the Australian economy is recovering well, and better than expected. GDP increased by 3.1 per cent in the December quarter, following a similar rise in the previous quarter (Graph 1). These back-to-back large increases are materially better outcomes than we expected back in August. They reflect the success that Australia has had on the health front, the very large fiscal and monetary policy support, and the flexibility of Australians in getting on with their lives and businesses. As a result, we are now within striking distance of recovering the pre-pandemic level of output.
Graph 1
There has also been positive news on the employment front over recent months. The recovery in employment has been V-shaped and there has been a welcome decline in the unemployment rate to 6.4 per cent (Graph 2). Job vacancies, job ads and hiring intentions remain strong. This suggests that the unemployment rate will continue to trend lower, although this trend could be temporarily interrupted when JobKeeper comes to an end later this month.
Graph 2
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
