One thing that we don’t do enough when thinking about US real time policy is watch international trends. Europe has been making headlines because its potential to blow up the world and because it serves as a morality tale for supporters of austerity.
However, just watching the ups and down of other countries can be informative in breaking apart trends that result from some unique domestic policy and wider worldwide movements.
All of that is simply to point that Australia is the land that the ‘nils forgot. There its forever 1998.
Here is employment ratio in the US vs Australia
The two countries match in ups and downs (though the downs down-under were worse) up until about 1998. Then the US stats in on a slow slide, while Australia just keeps on going.
Even the hit Australia took from the “Great Recession” was barely noticed.
Perhaps more pain inducing for Americans. Here are relative unemployment rates.
The 1992 recession hit Australia hard but after that’s its been unemployment has been down, down. It should come as no surprise that I consider this a triumph of Australian monetary policy. In 1993 Australia adopted a level targeting plan that centered around an average inflation rate of 2 to 3%. This implied that if inflation ran too low the central bank would let it run high.
The results are below: