The response to COVID-19 requires that large parts of the economy are shut down – with good public health justification. It’s already apparent that this is causing a large fall in economic activity and work performed in Australia. But the size of the fall won’t be apparent in the official national accounts and labour force data for some time.
We can look at more timely measures of economic activity and sentiment to gauge just how big the economic shock is that we’re experiencing.
Consumer confidence is a timely measure of what Australian households think about their own finances and the state of the economy overall. In the week ending 29 March, the ANZ-Roy Morgan Consumer Confidence index plunged to the lowest level in the nearly-50-year history of that series. Even in the deep recessions of the early-1980s and 1990s, consumer confidence never reached the lows seen in late March.
Australian governments and the Reserve Bank have rolled out unprecedented fiscal and monetary support to help businesses and households get through this crisis. It’s clear from the data that this support is needed. Policymakers will need to keep a close eye on the data to monitor what further support is required.
Grattan Institute is grateful to ANZ for supplying this data on request.