Four things

This post started as a dwelling price table but has morphed into something more.

Part of the reason is in reply to the nonsense that the RBA has been babbling on about in recent weeks – in this case about the need to get the unemployment rate up (?) to 4.5% – as this mark is what the RBA calls ‘full employment’ (go figure!) – resulting in some 140,000 people needing to lose their jobs in order to help bring inflation back to the RBA’s 2% to 3% annual CPI target rate.

This – to me – is just jawboning giving the RBA cover to lift interest rates again.

Yet this current BS is from the same mob that quoted the use of the Sahm Rule – earlier this year – as a better indicator as to when Australia has entered a recession rather than the use of two negative quarters of negative growth (GDP).

Today’s Matusik Missive holds three tables and four charts.

Bear with me, it won’t take too long to digest, however, there is a definition or two, which will shine some light on why the ABS unemployment figures are a crock and why we are already in a recession.

1.  Dwelling values

Table 1 shows that median dwelling values haven’t fallen that much since interest rates started to rise – down just 2% across the country since March this year – and during the June quarter they have risen by 2%.

This is partly because some 27% of home buyers over the past twelve months, haven’t borrowed money.

According to the tax office some 58,000 people have downsized over the past five years and have placed monies – on average $250,000 – into their superfunds.

Another reason for the tight housing market is that the supply of homes for sale remains tight.  See table 2.

The third, big reason, is strong demand.

This was fuelled initially by the pandemic – if you restrict people’s movements, they end up spending most of that time at home, and for many their abode has now become something more, resulting in the want to have something better and/or to keep what they have – and now, by higher overseas migration.

Before we move on to the next topic, here is a nugget of intel worth remembering – on average, and when using a decade long sliding scale (it took some work to figure out peeps!) – for every 100,000 new immigrants to Australia dwelling values rise by around 1%.

Given these three drivers it is little wonder rising interest rates have had little impact on Australia’s housing values.

2.  Unemployment

According to the ABS labour force data, Australia’s current unemployment rate is 3.6%, with a further 6.4% people ‘underemployed’ – i.e., those people who are in part-time work or ‘freelancers’ who are looking for more work.

Yet the business sections of the national newspapers these days are chockfull of businesses placed in administration; staff layoffs and hiring freezes.

I know quite a few people – down in Tassie and also on the mainland – that are looking for work (and/or more hours) but cannot even get an interview.  True most are over 50 years old, but still.

There is plenty of evidence to suggest that AI – the algorithm – used by many recruitment firms and the bigger companies are tossing aside qualified candidates.

Maybe it is time to go back to the past and ask for – in one page – why a candidate would be good at the advertised job.  And then the employer – yes, a human – actually reads the applications.

If you do this, I reckon you will find staff.

But I regress.

Table 3 – for mine – shows the real state of play when it comes to Australia’s unemployment and underemployment rates.

This data is from Roy Morgan – the only national labour force figures – again for mine, that you can trust.

Their latest data suggests that Australia’s unemployment rate is 9.1% and underemployment is 9.3%.    Moreover, some 400,000 are worse off, employment wise since interest rates started rising in May last year.

Now that passes the pub test.

But I will let you make up your own mind.


The Roy Morgan survey on Australia’s unemployment and underemployed is based on weekly interviews.  Some one million people have been interviewed since this poll started in 2007, and their latest survey covered about 6,000 telephone and online interviews in June 2023.

According to the Roy Morgan survey a person is classified as unemployed if they are looking for work, no matter when.

Households selected for the ABS survey are interviewed each month for eight months, with one-eighth of the sample being replaced each month.

The ABS classifies a person as unemployed if, when surveyed, they have been actively looking for work in the four weeks up to the end of the reference week and if they were available for work in the reference week.

The ABS classifies a person as employed if, when surveyed, a person worked for one hour or more during the reference week for pay, profit, commission or payment in kind, or even if a person worked for one hour or more without pay in a family business or on a farm.

And it is for these reasons why the ABS unemployment estimates are different from the Roy Morgan unemployment estimate.


3.  Inflation

Inflation is already falling, rapidly in fact, not only here but across many other countries.  See chart 1.

The inflationary pulse is over, with most the pandemic supply chain issues resolved.

Yes, there is still price gouging going on, plus there is way too much ‘greenflation’ and also excessive government spending but the current drivers of inflation have little to do with consumer exuberance.

Most people have pulled back their discretionary spending, and those that haven’t are not impacted that much – if at all – by rising interest rates.

Some are now talking about a wage price spiral.  Oh, give me a break!  The current wage increases are a lag indicator – they are catchup (and they won’t get there) – for past inflation.  See chart 2.

We are very unlikely to go back to the 1970s, which some economic talking heads are waxing lyrical about of late.

The long-term, wider view of inflation is that it is likely to fall due to technology, globalisation and demographics.  This why inflation was so low before the pandemic, and I think we will go back there sooner than many think.

On its way down, inflation might get stuck at around 3% to 4% for a period of time, but I think we will be back to very low inflation rates within the next five years or so.

We will need access to money and affordable rates to change our businesses (and keep people employed) given the onslaught of AI, immigration and shifting demographics.

The next big and consistent movements in interest rates – again if you ask me – is likely to be down.

4.  Recession

According to the Roy Morgan unemployment data and when using the Sahm Rule we are already in recession and have been so since the beginning of this year.

Any further hikes will just dig the Australian economy into a deeper hole.


The Salm Rule identifies the start of a recession when the three-month moving average of the national unemployment rate rises by 0.50% or more relative the its low during the previous twelve months.


Chart 3 suggests – again using Roy Morgan’s unemployment survey results – that Australia has been in recession three times over the past decade.  Chart 4 shows the Salm Rule but using the ABS unemployment results.

Chart 3 also passes the pub test, chart 4 not so much.

End note

RBA enough already, stop rising interest rates!

Now that wasn’t too painful was it?


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