Aus employment/aus macro

The turn is on, as we’ve been framing it. Some countries (Aus, NZ, much of Europe) simply cannot handle rates that are 500bps (approx, some higher, some lower) more than they were but a few short years ago.

We can debate if r* has moved higher in the US, fine, there’s lots of moving parts over there, IRA, CHIPS, massive share of fixed rate debt for h/h’s and corporates. Plenty of things I could see greasing the wheels of logic to a higher (modestly!) r*. But not here.

I also think it is fine, to more benignly state that U < 4% was “too low” (e.g. relative to a NAIRU) and thus moving upwards was required, so nothing overly untoward in moving back towards equilibrium. The more optimistic amongst us definitely frame it that way.

I am worried about the dreaded overshoot, & the historic improbability of soft landings overall (even as I am willing to grant the US has “stuck the landing”, I am less inclined to assume a dozen other countries should make the equally impressive gymnastic contortion to land on both feet).

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