December 7, 2020 by Dymphna

Well, that could have been worse

I’ll be honest. That panned out better than I expected…

So, close of 2020. Where are we at?

(Aka – what on earth just happened?!?)

Pretty much all the data we’re going to get this year is in, so we can paint a pretty clear picture of what 2020 has left us with.

And to be honest, we’re ending the year in a stronger position than even I thought we’d be in (and I’m a glass-half-full kinda gal.)

On the two key economic metrics that matter, we’ve done surprisingly well. GDP – also called the economy – is doing much better than expected. And so far the jobs market is too.

We got the GDP data last week. It was a strong result. We got 3.3% in the quarter, which would be colossal any other year, but this isn’t any other year, and much of it was due to the reopening of the economy after a forced lockdown in the June quarter.

However, it was better than most economists were expecting.

While we’re certainly on the road back to recovery, we’re not done just yet. The economy is still about 3.8% smaller than it was this time last year. That’s substantial.

Never-the-less, it’s better than most people could have hoped for, and most importantly, we’re still on the up and up.

The latest GDP data only runs up to the end of September, at which time Victoria was still in lockdown.

So we know the economy has come even further back since then. This is what NABs forecast looks like:

Given that much of the world (and our trading partners) are still dealing with a pandemic, this is a pretty decent picture.

Covid gave the Australian economy a solid whack, but it is making its way back at an impressive speed.

When you look at the job market it’s a similar story.

In many ways, the jobs data is even more important than the GDP data, since it’s unemployment and people defaulting on their mortgages that can crash a property market.

But we’re not seeing that happen.

There was a solid spike in June, but not to anything super-scary. I mean, it was a sudden lurch, but we didn’t break 8%, leaving us with an unemployment rate similar to what we saw at the turn of the millennium.

So, a little scary, yes. Devastating, no.

And given GDP is in full recovery mode, the worst is probably behind us too.

And again, this all precedes Victoria’s escape from lockdown.

When you looked at hours worked, you can see that Victoria is having a big impact on the data, and excluding Victoria, we’re getting back to something pretty close to ‘normal’ levels.

There has also been some erosion of full time work since Covid, but part-time work has bounced right back to trend levels. This is encouraging since part-time work tends to lead full-time work.

So when you put it all together, you have a picture of an economy that is weathering the storm.

Covid has had its impact, make no mistake about that.

But things could certainly have been a lot worse, and it now looks like the worst is behind us anyway.

2021, it’s over to you.