Australian Treasurer Josh Frydenberg confirmed on the 3rd of June 2020 that the coronavirus pandemic has plunged Australia into its first recession in 29 years.The last Treasurer to make such an announcement was Paul Keating who, in 1990 announced that Australians were experiencing “the recession we had to have”.
So, what is a recession, how will it affect our daily lives and is it all Gloom and Doom?
What is a Recession?
If a government records two consecutive quarters of decline in Gross Domestic Product (GDP), then that country is technically in a recession.
The GDP is essentially a scorecard of a country’s economic health, measuring the value of all goods and services produced in Australia, usually over a three-month or 12-month period.Two consecutive quarters of decline in GDP make a recession.
Frydenberg announced on Wednesday the economy shrank 0.3 per cent in the January to March quarter – primarily because of the COVID-19 pandemic.
This was on the back of one of the worst bushfire seasons that Australia had seen, which had a devastating impact on the local economies that rely on tourism over the Christmas period.
The Covid-19 pandemic and freeze on non-essential travel meant that attempts to encourage tourism post-bushfire just didn’t happen.
The Treasurer warned that the April to June 2020 quarter will be “far more severe” – so there are the two consecutive quarters of GDP decline.
We are officially in a Recession. But what does that mean for you?
Employment & Businesses
There will be lot fewer jobs across the board – especially in industries that have been dramatically impacted by the lockdown – retail, hospitality, small enterprises related to those industries and those business not prepared for the last 3 months of no income.
It’s estimated that already 1 million Australians have already become unemployed in the last 3 months.
The main reason, of course is the coronavirus-forced social distancing rules that closed down hundreds of thousands of businesses across Australia in March.
According to the Australian Bureau of Statistics (ABS), the number of available jobs dropped 7.5 per cent between March 14 and April 18.The unemployment rate rose one full percentage point in April from 5.2 per cent to 6.2 per cent.
It’s a large number, but it isn’t anywhere near as severe as the 11.2% unemployment rate in 1992.
I was one of the lucky ones who was fully employed in 1992, funnily enough as an assessor at The Department of Social Security (now Centrelink)!
The highest unemployment rate was 32% during the Great Depression of the 1930s.
Employment & Business Good News
It’s clear that the way businesses operate post covid-19 will be dramatically different than before.
But, there are businesses and whole industries that have not only weathered the lockdown, but have pivoted, taking advantage of technology, at home work options and focusing on new products and services and will thrive in the new economic reality.
You might already be in one of those businesses, or about to embark on a program of reskilling to find your place in that new marketplace.
Home based employment and business opportunities are the way of the future.
Taking stock of your skills, your experience, your passions and then building a home based income using those skills is the key…
Niche Market Consultants, boutique online retailers that offer high quality products (especially Australian made), and home based investors and traders are the ones set to hit new levels of income, financial independence and security in 2020, 2021 and beyond!
If you want to learn more about Establishing and Building Your Home-Based Trading and Investing Income, please CONTACT US for a free consultation.