Despite the deterioration of the US economy, Australia's economy still seems to be going along well. Today the Bureau of Statistics released the unemployment report for August (link, pdf, 945.1kb) which showed that the unemployment rate dropped to 4.1% seasonally adjusted. This is 2 percentage points below the US (6.1%). I don't know when Australia's unemployment rate was so low in comparison to the US.All feelings of national pride and schadenfreude aside, I am reasonably certain that unemployment will begin to rise within the next 3 months. Australia is still a small player in the world economy and always will be, and our economic strength is linked with the economic strength of the rest of the world.
With the US in recession and the GDP in the EU dropping in 2008 Q2, it is only a matter of time before Australia's economy gets hit. I think that our slowdown will begin in 2008 Q4. Nevertheless, I would point out that, on a one to one comparison, Australia's economy is structurally better than the US. Australia will certainly undergo a recession but it will not be as deep or as painful as that which America is going to go through.
Bloomberg report here.
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