Drum post– “Budget debate in a sea of contradictions”

My Drum post today is here. It is on  the budget and God help me I decided to throw in some economic theory.

The graphs in the post are below, but here’s one that is not in it, but gives an indicator of how Australia got through the GFC compared to other nations. I like the graph because I think it is worth remembering that the GFC is not some little “cold” that the rest of the world caught, and we got through with just a small case of the sniffles. It was a bout of pneumonia that ripped through the systems of many of the world’s biggest economies and put more than a few into the IC Unit.  

Imagine being in the UK, Italy, Spain or France and knowing that your economy was bigger four years ago. Even Germany and the USA have only recently reached the point of growing their economies to positions bigger than they were at the start of 2008. Australian on the other hand is over 7% bigger than then. I know GDP hides a lot of things wrong with an economy, but geez.

I note this because this week Essential Media had a poll that showed that the largest block of people (28%) of people think the reason we have a budget deficit is due to “Poor economic management by the Government”. Now sure it is nowhere near a majority, but that only 13% think it is due to “Lower tax revenues because of the Global Financial Crisis” suggests this Government seriously has failed to write a decent narrative on economic matters in the past 4 years. But view is nothing new to any readers of this blog.

In the post I also have this graph that looks at the expansion and contraction in the budget each year compared to the change in the cash rate in that year

Here’s the same period but looking at GDP growth each year and changes in the cash rate:

Which I think shows that the RBA really can afford to drop those rates somewhat. Inflation is not the issue at the moment – growth is.

[Note – the “Antipodean Economist” on Twitter notes correctly that the above graph has fairly significant “endogeneity issues” – ie the things on the graph are affected by other things on the graph. That’s fine – but I think the graph does show that during the 2000s for eg, the RBA was prepared to just tap the brakes a little while growth and inflation remained around 3%. I am not suggesting for example change in the cash rate will lead to certain levels of growth or anything like that – because obviously the RBA makes decisions on the cash rate on the basis of things like growth and the inflation rate – ie in GDP growth did not decline in 2008-09 because the cash rate declined, more you can see that the RBA’s reaction to the decline was to lower rates]

Drum Piece–the budget surplus

My Drum piece for this week is here.

Below are the graphs used in a form that you can click to get the bigger size:

Drum Piece: Nannies, Holden and ANU

My Drum piece from Wednesday is here. It looks at Abbott’s proposal to get the Productivity Commission to look at extending the child care tax rebate to nannies. It must be so gratifying to the PC that from now on every one of their recommendations will be put implemented by a future Abbott Government. Here comes pokies reform… Yeah right.

It has five graphs. Matt Cowgill, ever the data nerd, has created graph of my Drum posts comparing the number of graphs with the number of comments.

Drum Piece– The trend is not always your friend

My Drum piece today is here – it looks at the rather odd assessment by some in control of our economy that we are “at trend growth”. Bollocks says I.

Among the graphs is one that looks at GDP growth after going into a recession.

I only used the 1981-2, 1991, Dotcom and GFC ones as it started to get too confusing with many lines in there.

But here on Grog’s Gamut confusion is not something we worry about, so here is the same graph with the growth in GDP for the 12 quarter after entering a negative period of growth since 1960.

The growth out of the GFC still looks pretty weak.

These graphs take the starting point the quarter prior to entering the recession. The next graph looks at cumulative growth starting from the bottom of the recession. It really highlights the way the economy booms out of some recessions:

Astonishingly, taking the low point as the start, the past 12 quarters have been the worst 12 quarters of growth in GDP post a quarter of negative growth since 1960.

Yeah we’re at trend.

A couple things – look at the 1960 growth – that is a boom. No wonder George Megalogenis refers to the period as “the golden age” in his book, The Australian Moment (by the way – go buy it, highly recommended). Also The second best period if the Aqua line of growth out of the 1982-3 recession. This is a bit of a cheat, because as you can see, the 1981-2 recession was actually a double dip recession, and the blue line takes it's starting point the second of those dips (yeah that’s not complicated). But either way – the mid-1980s were boom-time AUS. Which was nice, given the 1970s had been pretty shite, and the early 1980s were the worst periods of negative growth since the Great Depression.

Also here is the graph again of the decline and eventual rise in the Employment to Population Ratio across all the recessions since 1977. Geez the 1990s were an awful time to enter the workforce.

As a special treat here is the 1991 line by itself with the actual dates, so all you who bought a copy of “Nevermind” and who watched Twin Peaks, Melrose Place and Seinfeld can relive the joys of unemployment:

What is really cool is that when it got back to square in July 200, the Dotcom bubble burst and the went down again and didn’t get back to square until November 2002!

Happy memories Gen X.

Drum Piece: Productivity: What even is it?

My Drum piece today is on the wonders of productivity – how it can apparently be many things, mostly what it is not actually.

Today it was also announced that the 2012 Best Australian Blogs Competition is all set to get going. It is run by the Sydney Writers Centre. You can find all the info here.  I am to be one of the judges – primarily for "the category of “commentary”:

Commentary
Blogs that share your opinion and comment on developments in an area of your interest. Commentary blogs can focus on any issue or industry including the media, politics, law, fashion, art, theatre, feminism and human rights.

You’ve got till 13 April to enter; finalists announced on 26 April, and the winners on 10 May.

Good luck. (And yes I did see “fashion” in the category. Don’t laugh, I am an absolute doyen on the fashion world. Hypercolour t-shirts are still in right?)

Unemployment Rate – 5.2%

So today, capping off a wonkarific week, the ABS released the Labour Force figures.

The skinny is that on seasonally adjusted terms the unemployment rate increased from 5.1% to 5.2%, on trend terms it remained steady at 5.2%. The trend rate has actually been steady for 7 months.

OK. Let’s get to the graphs.

First the “perspective” one. The long term graph:

The, “Hey America and Britain: How you Doing?” Graph

So yeah, things have been worse and are worse elsewhere. But let’s not get too cocky. OK let’s have a closer look at thing.

First the changes in employment:

The seasonal rate bounces up and down pretty drastically, and is useful for looking at corners turning, but the trend shows the picture quite starkly – flat.  There hasn’t been a rise (or fall) in employment number of greater than 0.1% in the past 12 months.

Next there is the changes in total hours worked. I won’t bother with the seasonal changes as they really jump around, but a comparison to employment growth shows what is happening.

For the 5th straight month the trend of hours worked has fallen – though the decline is slowing. This suggests that while people are being kept in work, their hours are being reduced. So hours are down, employment flat, why is the employment rate steady? A look at the next graph gives an indicator

The participation rate has been declining since November 2010 when the seasonal rate hit a record 66 per cent. 

A look at the employment to population ratio takes into account all things such a whether one is “looking for work” (ie  “Participating”) and I think is a better metric than the actual employment rate:

As you can see the trend has been declining in the past 7 months while the actual employment rate has been flat.

And finally in episode 245 of “Why does the data not conform to our ‘unions are killing the nation’ narrative”. The latest Industrial Disputes figures came out. The number declined from last quarter’s spike (which was due mostly to NSW public servants not covered by the Fair Work Australia Act).

As an aside, given the GDP figures came out yesterday and thus also the productivity rate here’s a graph of the rolling 2 year average of Industrial Disputes and of the GDP Per Hours Worked (Productivity)

Curiously as the number of disputes has declined, so too has the productivity growth. I’m not suggesting a link, but more observing that perhaps the problems of productivity in this country are a bit more complex than just worrying about unions.

Drum Piece: Seeing the wood for the GDP (10 Graphs)

My Drum piece today is here. It has a lot of graphs, but the clarity of them is not real good. Pretty sure this is due to transfer from Excel to Word to them whatever is done to put it on the web (yeah I’m real techy). It’s annoying you can’t click on the graphs to see them bigger. Any advice on what I can do to improve this is appreciated – though bear in mind I don’t have anything to do with the actual posting of the post on The Drum – that gets done by the ABC.

I also right at the last minute re-did the graphs to make them (ironically) clearer, and I mistakenly put the same graph in twice.

Anyhoo here are all the graphs in a clearer format: