The RBA created forecasts of how the unemployment rate in Australia will perform in the coming years in May 2020. Astonishingly, unemployment rates are lower than the forecasted best-case-scenario. This is an excellent indicator of how the economy is doing and the fact that although it may not be doing extremely well, it is performing better than most expected.
Another positive sign that the economy is performing better than expected is the labour force participation rate. There are more people looking for work or working than ever before which is against expectations after a recession (usually a recession means that there is a decrease in the participation rate).
However, experts have expressed concern about the impact removing JobKeeper and JobSeeker will have on the economy’s performance. This is because a lot of the funds that people now have in their bank accounts don’t come from wages and salaries, instead they come from government benefits.
The government hopes that once these benefits are stopped, people will spend the money they have saved over the pandemic. Although this would be ideal, the alternative is that individuals keep the money they have saved and the economy begins to decline.
In the coming months, we will be able to see whether Australian citizens behave as the government hopes they will, or if Australia gets sent into economic decline.