Reserve Bank governor Glenn Stevens said this week the economy is growing at only ''a bit below trend''.
And this week we learnt the smoothed unemployment rate has been at 5.5 per cent for three months.
Remember, economists regard full employment as an unemployment rate of about 5 per cent.
All this says most of the deficit we see on Tuesday will be structural. As we saw in last week's column, however, much of it will be the legacy of unwise decisions made by the Howard government
(including, Richardson reminds us, its decision to stop indexing the excise on petrol, which is now costing about $5 billion a year).
To be sustainable, the recurrent budget does need to be in balance on average over the cycle. It would risk damage to the economy to try to eliminate a big structural deficit in one hit. But that will not excuse any failure by the Gillard government to get on with reducing it.
