An increase in unemployment, economic downturn, and a possible decline in births in Australia.
People know what is going on in their homes, communities, and workplaces. This makes them collectively good at predicting important variables such as unemployment and fertility.
In our regular surveys, we ask respondents to provide their estimated likelihood that particular events will occur in the year ahead. The events include a rise in unemployment, a rise in specific prices, a decline in births, and several others.
On the issue of unemployment, the Wisdom of the Masses has a good track record of prediction six to nine months ahead. The likelihood of a rise in unemployment has been increasing since February 2023, suggesting a rising unemployment rate from mid-2023 into 2024. Low unemployment is one of the few strengths of the Australian economy and if the Wisdom of the Masses is accurate this would indicate further decline in economic growth.
The likelihood of a decline in the number of births has been increasing since August 2022. Given the gestation period and the long lags in data collection and publication, any actual decline will not be evident until December 2023 or March 2024. The timing suggests that the cause may be the combined impact of higher prices and interest rates. The natural rate of increase in the population (births minus deaths) has been declining for several years, but the rate of decline has accelerated over the past two years due to a large increase in deaths. If the number of births drops, then population growth will slow.
For some factors, expectations influence future behaviour. For example, expectations are currently high for a big increase in the price of electricity. This may make some people find ways to use less and some others may cut back discretionary spending in anticipation of a higher electricity bill. Information such as this aids judgement in forecasting.
The Wisdom of the Masses is updated quarterly and the May results are in our current report.