Credit crunch eases but jobs crisis grows

China's exchange rate remains low.

One assumes this comes into the "don't mention the war" category when America's Treasury Secretary visits Beijing, but is a situation that will need to be remedied if existing imbalances are eventually to be sorted.

China's recovery is of course Australia's bounty, with China in recent statistics passing Japan as Australia's greatest trading partner.

Certainly the major mining companies are sounding cheerier, putting it about that developing economies are recovering, which will boost commodity prices and set the scene for improved economic performance generally. Australia's wealthier citizens are experiencing recession while, so far at least, poorer people's incomes and spending are being propped up by the Rudd government's handouts and other forms of stimulus.

Housing markets tell the tale.

Prices in the more expensive suburbs have fallen substantially, while cheaper markets have risen as first-home buyers use generous government grants and other stimulus to push up prices.

Retail sales have also performed well, reflecting the effects of substantial handouts and other forms of short-term stimulus for middle to lower income earners.

Despite their partial recovery share prices are well below their 2008 peaks and many formerly well-to-do retirees are facing a constrained future.

The result is a two-speed economy, but continued increases in unemployment may change this situation, especially if wages begin to surge.

Last week saw a debate on wages, coincidentally just as Howard's WorkChoices legislation was replaced by the Rudd government's Fair Work legislation.

Official measures of unemployment have risen to 5.7 per cent -- well below comparable measures in the US and other developed nations.

This is the good news, though further increases can be expected later this week and during the remainder of 2009.