Scott Morrison’s gas-led recovery out of the COVID-19 recession is so 2020.
The idea of gas supporting the Australian economy as it endured the big ups and downs of the coronavirus has gone the way of sourdough starters, jigsaw puzzles and fighting over loo rolls at the local Woolies.
In its stead, consumers have stood tall and proud. And the December quarter national accounts highlight not only the importance of household spending as the Delta wave gave way to the Omicron surge but also to the economy going forward.
Gas-led recovery, like fights over loo paper, is so 2020. The economy has been saved by cashed-up shoppers.Credit:Viki Petherbridge
After the 1.9 per cent hit to growth delivered in the September quarter last year, as Victoria, NSW and the ACT bunkered down, the economy expanded 3.4 per cent through the final three months of 2021.
The growth was driven by consumers who, having been freed from their home offices and kitchen benches, could spend the money sitting in their bank accounts and enliven the economy.
Shoppers in NSW almost doubled their spending on clothing and footwear to a record $4 billion. They increased their expenditure through the state’s cafes, restaurants and hotels by almost 50 per cent or a lazy $1.7 billion.
South of the Murray, Victorians spent an extra $1.7 billion on recreational and cultural pursuits in just three months, taking the quarterly total to an all-time high of $7.7 billion.
Even Canberran shoppers got in on the act. Spending on health (up 18 per cent), household furnishings (19 per cent) and new cars (24 per cent) all lifted sharply as the economy re-opened.
Of the 3.4 per cent expansion of the economy, the increase in household spending accounted for 3.2 per cent.
While the economy is now 3.4 per cent larger than its pre-virus level, spending by households on goods is up by almost 9 per cent. Services, curtailed by the various coronavirus restrictions, have a long way to catch up and likely will in coming months.
It’s the army of consumers that Scott Morrison or Anthony Albanese will depend upon after the May election to keep the economy growing.
They have the cash – the household savings ratio is still very elevated while bank and mortgage offset accounts are still swelled by the money showered upon the country during the pandemic.
Unemployment is at 4.2 per cent and heading lower as employers struggle to get enough workers to keep open their doors. And the Reserve Bank, a little gun-shy after its pre-COVID missteps, still has its foot to the monetary policy floor even though inflation pressures are growing.
As always, there are risks to the outlook. The situation across Ukraine, spiralling petrol prices, another variant, this week’s floods or even a drop in housing prices (despite the long-term damage ever-increasing house prices cause) could all undermine the strong recovery.
But the economy’s future is tied to households. For all the talk about the importance of businesses using cheap gas to keep the economic home fires burning, the reality is grounded in house-bound consumers clicking and collecting.
Most Viewed in Politics
From our partners
Source: Read Full Article