I’ve been a bit surprised at the lack of fuss over the Reserve Bank’s forecast of 6% unemployment in 2011 in the June Monetary Policy Statement. 
Given how a couple of hundred lay-offs usually makes the news, I’d have thought the possiblity tens of thousands out of work might have caused a stir.
I guess there are two possiblities it hasn’t been news. Perhaps 6% unemployment is seen as a particularly surprising outcome, the current rate is historically low. Alternatively there are few people taking the RBNZ seriously. The Treasury seem to think the RBNZ’s going to be proven wrong.
4 responses so far ↓
Steve Withers // 16 June, 2008 at 10:28 pm |
Predictions are predictions. 2011 is far away. The trend may be obvious, but the path between now and then can be shaped by anything along the way.
Matt Nolan // 17 June, 2008 at 12:46 pm |
“Alternatively there are few people taking the RBNZ seriously”
I think this might be the case – which isn’t really fair given the amount of respect the RBNZ forecasters deserve.
However, on that note, I don’t really agree with them either. (I blab about it a bit here http://tvhe.wordpress.com/2008/06/05/june-08-ocr-review-and-mps/)
The Reserve Bank are an extremely good set of forecasters, however it appears they have forecast the worst case scenario rather than a scenario that balances the risks to economic activity (for example they have a significant fall in the world price of our exports – which is not a middle of the road view).
Although, Treasury seems to have underestimated the impact of the drought on economic activity over 2008. 2.3% growth to March 2009 when we have experienced a drought seems to be a bit strong.
Richard // 17 June, 2008 at 10:25 pm |
Hi Matt
Perhaps “taking the RBNZ seriously” was overstating things. Their record has been ahead of the Treasury for a fair while.
Read your post yesterday and the Westpac piece you linked to. Does seem to be a fair degree of pessimism at the RBNZ. With the unemployment figure, I just can’t see it jumping so high so quickly when there is such a difficultly for firms to get staff, especially if the $ drops and exporters get a bit of a boost.
Anyhoo, I’m rather sympathetic toward anyone whose job it is to make predictions in the current climate.
Matt Nolan // 20 June, 2008 at 5:44 pm |
“I just can’t see it jumping so high so quickly when there is such a difficultly for firms to get staff”
That’s the kicker – firms are still complaining about staff shortages even as domestic activity has slowed. I can’t see unemployment heading much past 5% over the next three years, let alone 6%.