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  • Writer's picturePete Jonson

There, and almost all the way back (Keynes does it again)

Jeff Borland is Australia’s best Labor market economist, and I suspect leads Australia’s economist’s pack.

His analysis is based upon ABS statistics but includes delving into the statistics in a way I greatly enjoy. Last Friday’s added to the GDP data published a week or so ago to suggest a faster and stronger recovery that even the optimists had predicted.

Here are the key points.

• By November, monthly hours worked were back to 1.5 per cent below March, having increased by 2.3 per cent in the previous month.

• Monthly hours worked increased in every state. Victoria accounted for about one‐half of the increase in total monthly hours that occurred; and one‐half came from other states. Hours worked in Victoria in November were 4.5 per cent below March.

• Recovery is increasingly encompassing full‐time employment. In September, virtually the entire increase in employment since May had been in part‐ time work. But in the next two months, two‐thirds of additional employment has been full‐time.

• Employment outcomes in November by gender and age were similar to previous months.

• Recovery has not been V‐shaped, but has been stronger than I was expecting in mid‐year. Critically, the resumption of economic activity as COVID‐19 was brought under control has not faced the headwind of a more general downturn. The scale and impact of fiscal stimulus – on households and businesses ‐ seems the major explanation for why there has been no headwind; and has enabled increased spending on activities coming out of shutdown.

Why has the recovery been so strong?

‘My feeling is that there are two related reasons. First, as COVID‐19 has been brought under control, the benefits of resumption of economic activity in affected industries have occurred without the headwind of a more broad‐based downturn.’

‘Second, and an explanation for the first reason, as well as an explanation in its own right, is the scale and impact of stimulus from fiscal policy.’

As well as more detailed explanations of these general matters, Professor Borland provides insightful graphs. I will show just one of these, but below is the link to Borland’s full presentation.

Second, and an explanation for the first reason, as well as an explanation in its own right, is

the scale and impact of stimulus from fiscal policy

Here is a link to the full article.

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Download PDF • 170KB

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And don’t miss Fiona Prior’s review of ‘2020 – the movie’ More here.

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