September 14, 2025 • 9 mins
This week, the labour force figures will give us a valuable insight into the economy - not just whether the unemployment rate is rising, but whether those who have jobs are getting enough work. Plus the US Federal Reserve is meeting, with an interest rate cut widely tipped for the world's largest economy.
Michael Thompson is joined by economist Stephen Koukoulas.
Fear & Greed Q+A: Join Sean Aylmer & Michael Thompson and the team as they answer questions on business, investing, economics, politics and more. If you have your own question, get in touch via our website, LinkedIn, Instagram or Facebook!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to Fear and Greed Q and A, where we
ask an answer question about business, investing, economics, politics and more.
Speaker 2 (00:11):
I'm Michael Thompson and every.
Speaker 1 (00:13):
Monday morning we are joined by economists Stephen Coucoulis to
look at the week ahead. You'll find him at the
kouk dot com. That's t g ko uk dot com
and on X using the handle of the kok Stephen,
Good morning.
Speaker 3 (00:25):
Very good morning, Michael.
Speaker 1 (00:27):
Now this week really all eyes are on locally, at
least the labor force data, the unemployment number that's coming
out on Thursday. What are we expecting to see?
Speaker 3 (00:38):
Yeah, and why that is important is because it's part
of the dual mandate of the Reserve Bank. We know,
and for decades we've had the Reserve Bank is an
inflation targeting central bank, and that's still true. That hasn't
gone away. But just to give a little bit of
context on why this labor force number on Thursday is
so important, is that when the bank was revamped, I
(00:58):
suppose by Treasurer Charms, what's that eighteen months ago or so,
he and the bank agreed to elevate the importance of
full employment as part of the mandate. So that's a
long winded way of saying that if the labor market
starts moving away from full employment, that is weak job creation,
higher unemployment. Even if inflation might be just a smidge
(01:22):
above the midpoint of the target, or maybe not quite
as low as the rb I would like it, they've
got to get equal waiting to the labor force numbers.
Which is why this is so important, because we know
that over the last three months employment GROW's actually been
pretty soft. It's only been an average of eight thousand
jobs per month in the last three months, and that's
when the population's growing at sort of twenty five thirty
(01:43):
thousand a months. So that's why the unemployment rate's gone
from four to four point two five ish percent. So
we're looking for a slightly better result because we've had
the economy looking a little better in household spending and
the like the last couple of months, and maybe that
will generate a few jobs. But if we don't get
that plus twenty five thousand employment and the unemployment rate,
(02:03):
if it were to increase to four point four percent,
for example, will the dogs be barking about another rate cup.
Speaker 1 (02:09):
So in terms of the jargon, the language that we
use here when we refer to full employment, what's that
relate to, Oh, Michael, I'll just switch my microphone off,
I'll step for a few minutes and I'll come back.
Speaker 3 (02:25):
In colloquial terms, is when everybody who wants a job
can get a job.
Speaker 2 (02:29):
Gotcha?
Speaker 3 (02:30):
And that actually, and that's not meant to be any
a derogatory towards doll ludges and surfers and these sort
of things, because a lot of people are unemployed because
I've just resigned from my job. I'm having a month
off before I start my new job. So in the survey,
you're unemployed. So I think that's called frictional unemployment. So
it's not saying full employments when unemployments zero, But it's
(02:52):
when anyone who wants a job can have a job,
and it's best measured, not necessarily through the unemployment rate.
This is the curious thing about full employment. It's measured
th wages. Because if we have full employment and over
full employment labor shortages, in other words, then workers can
put up their hands and say, well, I'm only going
to work for you if you give me your pay rise.
(03:14):
Otherwise I'm going to be sitting aside so it's a
combination of what the unemployment rate is plus wages and
just as we're saying that the unemployment rate has crept
up a bit in the last few months, and not coincidentally,
wages growth is well contained. So it's a moving feace.
There's no one single number that the Reserve background ayonss
can really put on it with a degree of confidence.
(03:36):
We sort of know when wages growth is decelerating and
unemployment is increasing that you're all moving away from full employment.
Speaker 1 (03:45):
Okay, And so we obviously know what it looks like
when unemployment is too high. Is it possible for it
to be too low then as well?
Speaker 3 (03:56):
The short answer is yes. That might sound like a
very harsh thing to say when even when we've got
full employment, and I will just contrack to what I
said a moment ago, but if you had an unplate
of three percent, that would be definitely too low, because
what that means is that there's a shortage of workers.
And we experienced this immediately after the pandemic and we
opened up everything again, there was a skill shortage. But
(04:19):
businesses saying oh right, I'm ready to invest, I'm ready
to expand, I need more workers no one's applying for
my job vacancy, and so business was actually postponed or deferred,
and of course that's bad for economic growth. You know,
we want firms with good ideas and fabulous ideas to
get the people with the skills and talent that they
need to expand business. So you can have an economy
(04:42):
that's got an unemployment rate that's too low, but that
shows up in a wage boom. And dare I say it,
not that we've seen that for decades in Australia, but
they've good old fashioned wage price spiral where firms put
up their wages to attract the talent, and the way
they recoup that high that labor cost as part of
it is put up to cover their costs, so you
get wages going oh, then you get inflation going up.
(05:04):
We're not there just to reassure everyone, but that is
sort of like at the background of what is full employment.
Speaker 1 (05:11):
I love these chats because it just gives me an
opportunity to ask you everything that I've ever wondered about
these about these themes, what about under employment?
Speaker 2 (05:22):
And so when we have so technically.
Speaker 1 (05:24):
You might be you might be employed, so you are
not counted as unemployed, but you do not have enough work,
you do not have as much work as you want,
and so you are technically underemployed.
Speaker 3 (05:35):
Is that right? Yes, great question, and the Bureau of
Statistics actually do have a number for that. It's about
six percent at the moment of the workforce are underemployed.
So the question is do you have a job, and yes,
so your count it as employed. Then the next question
the Bureau of Stats ask when they're surveying the labor
for statement is do you want to work more hours?
(05:57):
So that can be people who might have a casual job,
a part time they might be only doing ten hours
a week, which is they really want twenty to cover
the bills. So there's this underemployment component that is definitely
definitely there, And as I said, that's about six percent,
so it's actually higher than the unemployment rate by quite
a margin at the moment. So that's also an indicator
(06:17):
of slacking the economy because if your business picks up
and you're only you've got five casual workers and are
only doing fifteen hours a week, well off of them
twenty hours a week. So employment doesn't change, but the
hours worked increases. So that's why the labor force numbers.
The concepts of full employment nahru do I mention its
name are so complex and difficult to work out with
(06:42):
a hard sort of number put on it, but their
concepts that are still nonetheless really important. And we do
as economists, the Reserve Bank and Treasury whatever, mull over
these things because to get it wrong, and get it
wrong badly can lead to a large number of people
being unemployed. And that's you're just a alluding to, is
not a good thing. We don't want people to be unemployed.
(07:03):
It's bad for them socially, it's bad for the economy.
With my economists cap on, So yeah, we want to
keep near full employment now.
Speaker 1 (07:11):
So that's all eyes on Thursday to see what happens
with those numbers. The other big event happening this week,
we've got to look overseas for this one. The US
Federal Reserve is meeting, yes, which is Tuesday, Wednesday US time,
so effectively kind of Wednesday Thursday almost for US. And
there has been a great deal of talk and a
(07:33):
lot of expectation that the Fed will cut rates.
Speaker 2 (07:35):
Is it going to happen?
Speaker 3 (07:37):
It looks like it and this is. It's largely I'll
say largely on fundamental grounds. Yeah, we had our discussion
about our labor force state here in Australia, but we've
known from the US labor force lubs, including some very
big revisions to history. Every year, the Bureau of Labor
Statistics in the US to a benchmarking of their numbers.
I won't go into that, but they actually lost about
nine hundred thousand jobs in their re defining of what
(08:01):
employment is in the US. And that's okay an economy
of three hundred and thirty million people. But nonetheless, we
know the labor markets week and the unemployment rate in
the US has gone up. Employment growth is very weak,
so not dissimilar to here. And the FED has paused
for the last what is it, six or eight months.
They haven't moved rates lower because they've been worried about tariffs,
they've been worried about inflation just lingering a little bit
(08:24):
higher than they would like to see it. But that
labor market number, I'm not going to mention pressure from
Donald Trump on the FED.
Speaker 2 (08:32):
But there is a political element to it.
Speaker 3 (08:35):
There is a look what at this is there will
be a cut. They probably only go twenty five, so
mister Trump will probably really crossed that they haven't got
the Fed Fund rate lower. So probably a twenty five
point cut, and as we say, a duvish cut, because
when we look at the futures market right now, they've
got from today about another of what is it about
another four rate cuts priced in over the next six
(08:56):
to twelve months, So we'll get twenty five this week
and probably another seventy five after that over the course
of the next nnch twelve months.
Speaker 1 (09:04):
All right, so we've got one big thing happening here,
one big thing happening overseas. Makes for a very exciting week.
Enjoy it, Stephen, Thank you, Michael. That was economist Stephen
Coo Coolest, better known as the Kook. You can find
him at the kook dot com and follow him on
x using the handle of the Kook.
Speaker 2 (09:18):
I'm Michael Thompson and missus Bear and Greg Q and
a
Welcome to Fear and Greed Q and A, where we
ask an answer question about business, investing, economics, politics and more.
Speaker 2 (00:11):
I'm Michael Thompson and every.
Speaker 1 (00:13):
Monday morning we are joined by economists Stephen Coucoulis to
look at the week ahead. You'll find him at the
kouk dot com. That's t g ko uk dot com
and on X using the handle of the kok Stephen,
Good morning.
Speaker 3 (00:25):
Very good morning, Michael.
Speaker 1 (00:27):
Now this week really all eyes are on locally, at
least the labor force data, the unemployment number that's coming
out on Thursday. What are we expecting to see?
Speaker 3 (00:38):
Yeah, and why that is important is because it's part
of the dual mandate of the Reserve Bank. We know,
and for decades we've had the Reserve Bank is an
inflation targeting central bank, and that's still true. That hasn't
gone away. But just to give a little bit of
context on why this labor force number on Thursday is
so important, is that when the bank was revamped, I
(00:58):
suppose by Treasurer Charms, what's that eighteen months ago or so,
he and the bank agreed to elevate the importance of
full employment as part of the mandate. So that's a
long winded way of saying that if the labor market
starts moving away from full employment, that is weak job creation,
higher unemployment. Even if inflation might be just a smidge
(01:22):
above the midpoint of the target, or maybe not quite
as low as the rb I would like it, they've
got to get equal waiting to the labor force numbers.
Which is why this is so important, because we know
that over the last three months employment GROW's actually been
pretty soft. It's only been an average of eight thousand
jobs per month in the last three months, and that's
when the population's growing at sort of twenty five thirty
(01:43):
thousand a months. So that's why the unemployment rate's gone
from four to four point two five ish percent. So
we're looking for a slightly better result because we've had
the economy looking a little better in household spending and
the like the last couple of months, and maybe that
will generate a few jobs. But if we don't get
that plus twenty five thousand employment and the unemployment rate,
(02:03):
if it were to increase to four point four percent,
for example, will the dogs be barking about another rate cup.
Speaker 1 (02:09):
So in terms of the jargon, the language that we
use here when we refer to full employment, what's that
relate to, Oh, Michael, I'll just switch my microphone off,
I'll step for a few minutes and I'll come back.
Speaker 3 (02:25):
In colloquial terms, is when everybody who wants a job
can get a job.
Speaker 2 (02:29):
Gotcha?
Speaker 3 (02:30):
And that actually, and that's not meant to be any
a derogatory towards doll ludges and surfers and these sort
of things, because a lot of people are unemployed because
I've just resigned from my job. I'm having a month
off before I start my new job. So in the survey,
you're unemployed. So I think that's called frictional unemployment. So
it's not saying full employments when unemployments zero, But it's
(02:52):
when anyone who wants a job can have a job,
and it's best measured, not necessarily through the unemployment rate.
This is the curious thing about full employment. It's measured
th wages. Because if we have full employment and over
full employment labor shortages, in other words, then workers can
put up their hands and say, well, I'm only going
to work for you if you give me your pay rise.
(03:14):
Otherwise I'm going to be sitting aside so it's a
combination of what the unemployment rate is plus wages and
just as we're saying that the unemployment rate has crept
up a bit in the last few months, and not coincidentally,
wages growth is well contained. So it's a moving feace.
There's no one single number that the Reserve background ayonss
can really put on it with a degree of confidence.
(03:36):
We sort of know when wages growth is decelerating and
unemployment is increasing that you're all moving away from full employment.
Speaker 1 (03:45):
Okay, And so we obviously know what it looks like
when unemployment is too high. Is it possible for it
to be too low then as well?
Speaker 3 (03:56):
The short answer is yes. That might sound like a
very harsh thing to say when even when we've got
full employment, and I will just contrack to what I
said a moment ago, but if you had an unplate
of three percent, that would be definitely too low, because
what that means is that there's a shortage of workers.
And we experienced this immediately after the pandemic and we
opened up everything again, there was a skill shortage. But
(04:19):
businesses saying oh right, I'm ready to invest, I'm ready
to expand, I need more workers no one's applying for
my job vacancy, and so business was actually postponed or deferred,
and of course that's bad for economic growth. You know,
we want firms with good ideas and fabulous ideas to
get the people with the skills and talent that they
need to expand business. So you can have an economy
(04:42):
that's got an unemployment rate that's too low, but that
shows up in a wage boom. And dare I say it,
not that we've seen that for decades in Australia, but
they've good old fashioned wage price spiral where firms put
up their wages to attract the talent, and the way
they recoup that high that labor cost as part of
it is put up to cover their costs, so you
get wages going oh, then you get inflation going up.
(05:04):
We're not there just to reassure everyone, but that is
sort of like at the background of what is full employment.
Speaker 1 (05:11):
I love these chats because it just gives me an
opportunity to ask you everything that I've ever wondered about
these about these themes, what about under employment?
Speaker 2 (05:22):
And so when we have so technically.
Speaker 1 (05:24):
You might be you might be employed, so you are
not counted as unemployed, but you do not have enough work,
you do not have as much work as you want,
and so you are technically underemployed.
Speaker 3 (05:35):
Is that right? Yes, great question, and the Bureau of
Statistics actually do have a number for that. It's about
six percent at the moment of the workforce are underemployed.
So the question is do you have a job, and yes,
so your count it as employed. Then the next question
the Bureau of Stats ask when they're surveying the labor
for statement is do you want to work more hours?
(05:57):
So that can be people who might have a casual job,
a part time they might be only doing ten hours
a week, which is they really want twenty to cover
the bills. So there's this underemployment component that is definitely
definitely there, And as I said, that's about six percent,
so it's actually higher than the unemployment rate by quite
a margin at the moment. So that's also an indicator
(06:17):
of slacking the economy because if your business picks up
and you're only you've got five casual workers and are
only doing fifteen hours a week, well off of them
twenty hours a week. So employment doesn't change, but the
hours worked increases. So that's why the labor force numbers.
The concepts of full employment nahru do I mention its
name are so complex and difficult to work out with
(06:42):
a hard sort of number put on it, but their
concepts that are still nonetheless really important. And we do
as economists, the Reserve Bank and Treasury whatever, mull over
these things because to get it wrong, and get it
wrong badly can lead to a large number of people
being unemployed. And that's you're just a alluding to, is
not a good thing. We don't want people to be unemployed.
(07:03):
It's bad for them socially, it's bad for the economy.
With my economists cap on, So yeah, we want to
keep near full employment now.
Speaker 1 (07:11):
So that's all eyes on Thursday to see what happens
with those numbers. The other big event happening this week,
we've got to look overseas for this one. The US
Federal Reserve is meeting, yes, which is Tuesday, Wednesday US time,
so effectively kind of Wednesday Thursday almost for US. And
there has been a great deal of talk and a
(07:33):
lot of expectation that the Fed will cut rates.
Speaker 2 (07:35):
Is it going to happen?
Speaker 3 (07:37):
It looks like it and this is. It's largely I'll
say largely on fundamental grounds. Yeah, we had our discussion
about our labor force state here in Australia, but we've
known from the US labor force lubs, including some very
big revisions to history. Every year, the Bureau of Labor
Statistics in the US to a benchmarking of their numbers.
I won't go into that, but they actually lost about
nine hundred thousand jobs in their re defining of what
(08:01):
employment is in the US. And that's okay an economy
of three hundred and thirty million people. But nonetheless, we
know the labor markets week and the unemployment rate in
the US has gone up. Employment growth is very weak,
so not dissimilar to here. And the FED has paused
for the last what is it, six or eight months.
They haven't moved rates lower because they've been worried about tariffs,
they've been worried about inflation just lingering a little bit
(08:24):
higher than they would like to see it. But that
labor market number, I'm not going to mention pressure from
Donald Trump on the FED.
Speaker 2 (08:32):
But there is a political element to it.
Speaker 3 (08:35):
There is a look what at this is there will
be a cut. They probably only go twenty five, so
mister Trump will probably really crossed that they haven't got
the Fed Fund rate lower. So probably a twenty five
point cut, and as we say, a duvish cut, because
when we look at the futures market right now, they've
got from today about another of what is it about
another four rate cuts priced in over the next six
(08:56):
to twelve months, So we'll get twenty five this week
and probably another seventy five after that over the course
of the next nnch twelve months.
Speaker 1 (09:04):
All right, so we've got one big thing happening here,
one big thing happening overseas. Makes for a very exciting week.
Enjoy it, Stephen, Thank you, Michael. That was economist Stephen
Coo Coolest, better known as the Kook. You can find
him at the kook dot com and follow him on
x using the handle of the Kook.
Speaker 2 (09:18):
I'm Michael Thompson and missus Bear and Greg Q and
a
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