Suddenly we’re talking about a recession that no one suspected a week ago, as lockdowns crush the economy. But the real impacts will be on monetary policy.
How quickly the sunny days of recovery can turn cloudy — ominous, even.
The prime minister is now assuring us we’re going to dodge a recession that as of last week no one had even thought was possible. This morning Josh Frydenberg suggested that growth and employment will take a hit in the current quarter thanks to Sydney, Melbourne and Adelaide being in lockdown. We shouldn’t forget that we saw a bigger than expected 1.8% slide in retail sales in June, thanks to the earlier Victorian lockdown and the lockdown that started in NSW near the end of the month. That will have a small impact on growth in the June quarter too.
We’re seeing layoffs and reduced hours in retail, with shoe retailer Accent Group telling staff it had used up the $9.6 million in old JobKeeper funds that enabled it to keep staffing levels steady during the previous lockdowns and clamps. Qantas is in the middle of 6000 layoffs as well. And now the extended uncertainty of, in particular, lockdown in Sydney where the first three weeks of of Gladys Berejiklian’s patented lockdown-lite had little impact on reducing numbers.
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