We are currently seeing two potentially good lead indicators of recovery, with the ASX currently at its highest level since March, and consumer spending now on the rise.
According to credit bureau illion (in partnership with AlphaBeta) consumer spending has risen back up to just 4% below pre-pandemic levels, off the back of the JobSeeker payments flowing through, and the announcements of the partial lifting of restrictions in most states.
Talk of the recovery invokes an alphabet soup of predictions, from V-shaped, to U or W-shaped. There are many unpredictable factors still in play, so no-one truly knows for sure. However, with a range of potential scenarios it’s fair to assume that not all the surprises will be negative ones.
Yes, poor economic data will be in headlines for a while, but it will lag the actual health and economic recovery. We have to factor in current geopolitical tensions with potential for trade wars and further interruptions to the supply chain. We have no idea when international tourism will return, nor as yet the impact on property prices.
Yet the reopening of our economy is happening sooner, and so far more safely than other parts of the first world economy in Europe and America.
The forced withdrawal of most people from their usual habits could result in permanent changes in behaviour or choices. But the potential shifts in consumer demand are just as likely to have an upside than a negative outcome. Anything from greater demand for home office products or health supplements, or from urban living to tree change, is possible. Domestic tourism and home delivery services are certainly set for an upsurge. Provided businesses are nimble and responsive, there will be markets to supply.
And of course technology and innovation will be extremely important weapons to have in your armoury in the recovery period.
As one leading bank economist said recently said, it is not how far the tide goes out in this contraction that is important, but how long it stays out for. There are hopeful signs that it is heading back in to shore, so hunt out your bathers and prepare to jump in.