While the Australian economy has performed better than many others over the past decade, we still have some spare capacity. Determining exactly how much is difficult, but Bank staff estimate that the current unemployment rate of 5.6 per cent is around ½ percentage point or a bit more above full employment.
Fortunately, for both of us, he was humble enough to admit he could not understand it…and therefore received an explanation. As a result, he came up with a story that was accurate and easy to understand.