Shoppers are spending again! It may just be on dunny roll and hand sanitiser - but money's money.
Who knew all it would take to get Australians back into the shops in droves was a pesky pandemic? Why didn't the ScoMo Dance Krew think of that before?
What a week! As Australians force Coles and Woolies to run out of loo paper in a rush of panic-buying, the Reserve Bank has done what even a week ago economists were saying was unthinkable.
Two weeks ago, the AFR proclaimed there was no way the RBA would dare cut rates again. Yet here we are, official interest rates slashed to a new record low of 0.5 per cent - and lo! the big banks have acted contrary to their nature and all agreed (very, very quickly, mind you) to pass the cuts on in full.
Decisions that fast mean they were already primed to pull the trigger. As banks, they can see things others can't - like squeezed business cash flows, for example, and calls from business for extra credit. Not that they're going to act quite so fast on making good; it'll be the end of March before the slowest of them introduce the new cuts.
Australia kicked off what is expected to be a global wave of central bank rate cuts; the Fed, for example, just cut a whopping 50 basis points off US interest rates. Other Major economies across the planet are equally worried about recent market falls and will be moving to stymie the damage.
The dirty R-word
Australia booked close to a billion dollars in surplus in the three months to December, and the economy was actually growing. Now, signals from the government support the supposition that that's all but gone; the impact of natural and health disasters are creating a very different economic picture for a government that has staked its reputation on delivering a side of surplus with the 2020 Budget main course in May.
Fears that the economy has gone backward this quarter, made stronger by yesterday's admission by the RBA that we're in a tight spot, have given confidence to people talking up the chances of a global recession.
Fear is a powerful thing; see previous comments on toilet-paper-as-hot-commodity, for example. Team Australia (Australia - F*** Yeah!) has pulled together in the past 24 hours to ensure rates are passed on and grocery shelves stay stocked - but that's a pretty floppy bandaid when fear is driving everything from business investment to fighting people at checkouts for a tin of tuna.
In light of all this, some good news: according to the Australian Bureau of Agricultural and Resource Economics and Sciences, the farming sector is showing signs of recovery from the eastern Australia drought that has been strangling it since late 2016.
Lowe's done his bit for the country. Over to you, ScoMo!
Whatever your opinion on the efficacy of the RBA's latest stab, it has stimulated the ol' chestnut calls for the Morrison government to play its own cards to stimulate a flagging economy.
The business community, for example, says yesterday's events need to be closely followed by government stimulus. ScoMo told us yesterday to expect "targeted economic measures" soon (ie before the May budget). Could it be that they'll bring personal income tax cuts forward? The PM suggested there may be some business investment tax breaks coming shortly, but didn't elaborate on specifics.
One thing Australia needs right now is a sense of perspective. Is all this, as Harvard professor Cass Sunstein (for example) says, an overreaction? Is the word "pandemic" too emotive a term to use for this situation?
Either way, the RBA's language when describing the economic impact of COVID-19's spread is telling. It mentioned coronavirus more than a dozen times in yesterday's statement, justifying moves to protect Australia's over-leveraging of property to shore up personal wealth...it's no surprise that the word "bubble" has been used a lot to describe the likely impact of ever-decreasing rates on a recovering housing market.
Speaking of housing...
"How good are home loans!" could be the cry from Canberra today. Borrowers are certainly big winners out of yesterday's announcement, which neatly coincided with news that home listings in Sydney surged 60 per cent in February.
Housing construction isn't faring quite so well; approvals slumped in January. NAB economists reckon that without COVID-19, this sector would be on the way to recovery by end 2020 - but that pace could be threatened as a result of the current situation.
As the boffins at DFA so neatly said earlier today, rate cuts don't cure viruses. No matter how many times Macquarie Media's Alan Jones lambasts us all for fools over being worried about coronavirus, the queues at Coles checkouts today tell us everything we need to know.