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There was an interesting comment recently in the “Money Minute” segment on Channel 9’s Today Show that mentioned the small but significant rise in unemployment from 5.1% to 5.2%. It doesn't seem like there is anything for us to worry about, which may be true for now.
The concern is that Wayne Swan has forecast a slim budget surplus by the end of this coming financial year. A big component of this forecast stipulates our unemployment level to be no higher than 5.25% for the next 12 months. Therefore, if unemployment increases further by just another 0.1% to 0.2% over the coming months, the slim surplus that the treasurer has been confidently predicting over the past few months will be wiped out.
The affect on the surplus
When unemployment runs up, less people are at work and thus there will be less tax paid to the Government. Conversely, there will be more Government handouts to those not working. That’s a "double whammy" for the Government.
We don't have a problem with people having an opinion and forecasting what they think may happen. But when the Government, represented surely by “one of the smartest mathematicians” in the Labor Government, provides himself with almost no margin for error, the forecast often tells us more about the forecaster than the forecast itself.
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