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COVID-19 is affecting our economy and way of life – with considerable speed and impact. Policy makers need to be finely attuned to these developments, but that’s no easy task, in part because good policy is informed by good data. However, in the current crisis, many traditional data sources lack the timeliness to provide real-time insights.
As an example, the first official insight into the Australian labour market that we’ll receive won’t be released until later this month, three weeks after the period it’s measuring. And it won’t give a full picture of labour market impacts in March because this release will only cover the first two weeks of March.
What are the real time and leading indicators telling us?
These early indicators are providing evidence around the scale of the COVID-19 crisis, and the policy response to support the economy has ramped up quickly to match. The first Federal response cost $17 billion, the second round another $66 billion, and then the third is budgeted for up to $130 billion. There has been some concern about the cost of these policies, but as Deloitte Access Economics partner Chris Richardson explains, it shouldn’t be something to fear.
“Although the dollars are unprecedented, what’s even more unprecedented are the interest rates we’ll be paying on this new debt. Never in the two thousand years of recorded history of interest rates has it been cheaper for governments to borrow. Never. And markets aren’t fazed in the slightest: they reacted to the latest package by dropping the rate on 10-year Commonwealth borrowing substantially further.
“There are lots of things to be scared of. The fight for our health is a long way from being won.
“But don’t be scared of the debt – its costs aren’t that bad. And chances are that taking on this debt will be a great investment in Australian livelihoods.”
An analysis of the implications of Federal government spending announcements on debt levels and repayments can be found in Who’s afraid of the big bad debt?
David is a macro economist with extensive experience in applied economic and quantitative analysis of the Australian economy, along with considerable experience in labor market analysis. David is a regular commentator on macroeconomic trends, and prepares a weekly economic briefing newsletter.