Things are not as they should be in Australia. But will ‘normal’ ever return after Covid?
As I write this from my home rumpus room/office, my wife is teaching a class of year 7 via Zoom, my eldest daughter is finishing her third term of year 12 online and my special needs youngest daughter is having to make do with our very poor efforts at remote learning in between our work and the one-hour online class she has each day.
Things are decidedly not normal.
But what is normal and how will we know it has returned? Perhaps more importantly will “normal” ever return?
On Wednesday the Australian Bureau of Statistics announced a record 6.5% of all employed are working multiple jobs. It clearly is due to the pandemic:
Given in the June quarter there were 1.077 million “secondary jobs” (ie those which were not the main paying job of the employee) but just 867,900 people working multiple jobs, that also means there is likely a record number of people working three or more jobs.
That is clearly not good, but it is tough to work out if it is only pandemic related or part of the trend since the GFC.
One of the easiest ways to work out that things are not as they should be is that it is now 16 months since the ABS stopped trying to calculate a trend rate of unemployment because it didn’t make sense:
At least with the labour market some measures can let us know when things are back to normal. At the moment, the number of people “working” zero hours has risen sharply:
But prior to the New South Wales and Victoria lockdowns, the number of people working zero hours was around the long-term median, so when we finally can leave our homes here in south-east Australia that regular level should return.
But other aspects are trickier.
We currently have decade-low unemployment and yet now we have around a quarter of a million fewer people working than would have been expected prior to the pandemic.
The reason is we also have much fewer people in the country than we would have expected:
Clearly a barely increasing adult population is not normal, but for how long will it continue? Will it remain for so long that, as I noted with interest rates on Tuesday, it becomes the new normal?
And what about interest rates? Right now the average term deposit rate is just 0.25%. Given the underlying inflation rate is 1.6%, that means your money loses value:
That surely can’t last, and in all likelihood neither can the current low real mortgage rates – yet how will we know things are back to normal? Is it the pre-pandemic level or is that now abnormally high?
One aspect we know that is completely out of whack is the number of tourists visiting Australia:
And yet when the borders open will the old numbers return? Will people quickly grab their passports and get on planes, or will they be hesitant to book ahead given how much disruption there has been?
This is why just saying “when we are all vaccinated and restrictions are over, normality will return” is a bit of a guess.
If we do have to “live with the virus”, how will we know what that means, and when will we know economic data is no longer affected by the pandemic?
Think about our purchases of household items such as furniture, electronics and hardware. In July, Australians spent around half a billion dollars more on such items than would have been expected prior to the pandemic:
Does that at some point return to the trend? Do we stop our household spending and start going on holidays again? If so, what will that do to the retail sector and when will we be able to say all the effects of the boom and bust have washed out?
Just how weird things are can be seen from what is happening in the United States.
The crowds there are back at the football and even the movies. The past Labor Day weekend saw nearly $140m spent at the box office – in line with previous years.
But only 47 movies were in release compared to the usual 100 or so, and 97% of total box office was taken by the top 10 movies, rather than the usual 70%:
Is this the new normal for the film industry or still a weird pandemic quirk?
We long for the end of restrictions and for full vaccination and health, but even once that has occurred, it would actually be surprising if what we once considered normal completely returns.