Job figures hide true extent of economic hit but there’s still hope for Christmas
This Sunday Victoria joins NSW in detailing its roadmap out of lockdown: the best case outlook is that it will lock the national economy into bouncing along the bottom through to Christmas.
The very best case outlook it that our two biggest states – close to 60 per cent of the national economy – could set us up for a surging ChristmasNew Year retail spend that kicks 2022 off in relatively strong fashion across Australia.
In a weird way, this would reverse what happened in the March and June quarters last year when we slid into the first
Covid lockdowns.
Back then the economy stumbled in the March quarter – mostly because of the bushfires and the first month of the ban on international flights.
And then of course it plunged an unprecedented 7 per cent in the June quarter, when the entire national economy was locked down for the first and only time in our entire history, and – fingers crossed – in our future as well.
It doesn’t bear thinking how even bigger the plunge would have been but for JobKeeper and all the other tens of billions of dollars pumped out. That was when JobKeeper was working.
This September quarter is done and dusted, even if it hasn’t shown up in the official statistics yet – and that done and dusting has put us back into recession.
We don’t get the GDP numbers for the September quarter – which measure the entire economy – until early December.
The latest official jobless number from the ABS seemed to suggest we were in the middle of a boom! The national jobless rate dropped to 4.5 per cent – the lowest it’s been since 2008!
It was all utterly, utterly out of date. It only measured the numbers for the first two weeks of August, when Victoria’s “short snap lockdown” was just getting started (the Victorian jobless
rate plunged to just 4.1 per cent!)
Even the NSW jobless rate was “only” 4.9 per cent – thanks to well over 100,000 of the jobless in that state just giving up looking for a job and so no longer measured as jobless, and more than twice that number measured as employed even though they were working zero hours.
The real jobless rate in NSW was well over 10 per cent and Victoria would have leapt to a similar level this month as the lockdown well and truly settled over Melbourne.
In simple terms this means the NSW and Victorian economies will both have shrunk by around 6-7 per cent in this September quarter – every bit as bad as what happened in the June quarter last year.
The big difference is that the rest of Australia – the other 40 per cent - hasn’t joined them.
But the other states have been dragged down by the NSW and Victorian lockdowns and their own selfinflicted border closures.
Queensland would have gone negative perhaps by around 2-3 per cent because of the greater importance of tourism, especially from the two southern states.
In contrast, WA would have been positive by around 2-3 per cent, thanks to iron ore – the dollars it pours generally into the WA economy and the huge royalties it pours into the WA budget, the only budget in the country that was in surplus for the 2020-21 year.
But iron ore prices peaked in July. In just months they have halved. If they stay down or, worse, go even lower, this will have a disastrous impact on both the WA economy and its budget.
It won’t be great for national economy and the national budget either. But the savage impact will on the other side of the Nullarbor.
Put all that together and the national economy will have gone down around 4 per cent this September quarter.
We know that NSW intends to open up progressively through the December quarter.
We will find out on Sunday how quickly and how deeply Victoria will follow. It will clearly be a roadmap that lags.
You have to say there’s little “risk” of either state – and especially Victoria – accelerating its opening up.
The risk is the opposite – that Victoria, especially, snaps back into lockdown.
Thus the best case for the national economy is that we bounce along the September quarter bottom until we get closer to the ends of the two roadmaps out of lockdown.
Hopefully, by early to midDecember.
That would be, if you’ll excuse the word, perfectly timed. It would hopefully spark the mother of all spending binges in both shops and hospitality.
It would be up to the other states – and especially Queensland – if they wanted to share in it.
It would certainly kick off the new year well.
After which we would be in the hands of the virus, the vaccines and the – state – politicians.