This post is a quick snap shot of the economy.
Last Wednesday night (Australian time) the fallout from Trump’s trade policy hit a genuine crisis point.
The American bond market sold off, pushing bond prices down, and interest rates up sharply.
It was a crisis because, the bedrock of the global financial system — the US Treasury bond market — was on the brink of collapse.
It was signalling to the global financial system, that confidence in the US’s ability to manage its economy was being seriously eroded.
Then, in the middle of Wednesday night (Australian time) Trump said two words that not just relaxed the financial markets but sent them into a state of euphoria: “pause” and “deal”.
Financial markets were no longer staring into the economic abyss.
The US president had hit pause on most of his tariff plans — except the 125 per cent impost on Chinese imports.
And, crucially, he said he was prepared to deal with other countries who resisted the urge to retaliate.
Unemployment Rate in Australia is around 4.10 percent, although true unemployment is much higher than this, especially in Adelaide.
According to the recent Australian Bureau of Statistics (ABS), 52,800 jobs were lost from the economy, well below forecasts of a 30,000 increase in employment.
The drop in employment came as fewer people were in work or looking for a job, with the participation rate falling to 66.8 per cent, from a record high of 67.3 per cent in January.
The ABS attributed part of the fall in employment to fewer older workers returning to work in February, with employment among older age groups lower than in the same month in 2024.
The Reserve Bank’s latest forecasts are for the unemployment rate to average about 4.2 per cent by mid-year, and remain around that level over the next few years.
Much depends on how Australian trading and export businesses fair with the Trump tariffs.
One area to keenly watch is if the Chinese economy goes backwards. China is a key trading partner with Australia and if China sneezes, Australia comes down with the flu.