Unemployment, interest rates and the market

Australia’s unemployment rate has climbed to a post GFC high of 5.8 per cent, up by 0.1 per cent in August.  While the unemployment rate in Australia is rising this is a worldwide problem. During the global financial crisis many employers replaced full-time jobs with part-time roles, and they are yet to change them back

But what do the official unemployment rates mean?  The problem is that the unemployment data which are released are in fact an underestimate of the real unemployment figure.     The reason for this is that the long term unemployed lose hope, do not continue to seek work and so do not participate.  They are thus not included in the calculation so the unemployment data may significantly under estimate the actual rate.

For example in the United States where the official unemployment rate is 7.3% the actual unemployment rate according… Continue reading

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