Beyond the arrival gate, the broader impact of the fight against the virus was being played out in the nation’s shopping malls.
Michael Hill. Village Roadshow. Athlete’s Foot. Tarocash. Lovisa.
Some of the biggest names in corporate or retail Australia. And some of those to stand down or let go tens of thousands of staff in what has been the worst five days for Australian workers since the Great Depression.
The tension between the health of the nation’s citizens and their economic fortunes is growing almost as quickly as the number of people with the virus.
Prime Minister Scott Morrison this week explained what he and his cabinet face.
“[We have] a twin crisis, a crisis on a health front which is also causing a crisis in the economy as well. And both of them can be equally as deadly, both in terms of the lives of Australians and their livelihoods,” he said.
That followed the breakdown in the nation’s social services system that resulted in tens of thousands of people – who are supposed to be keeping a safe distance from their fellow citizens – standing cheek-by-jowl outside Centrelink offices.
Victorian Premier Daniel Andrews said the long lines were a sign of the economic ailment facing the country. But it could be worse.
“We got queues at Centrelink offices. That’s heartbreaking. What we don’t want is queues for people
who need a machine to help them breathe,” he said.
“We cannot have people queuing for intensive care beds. That will mean they will die.”
The federal budget has been delayed in part because Treasury cannot accurately forecast where the economy will be within the next three months, let alone by the end of next financial year.
A week ago, the well-respected economics team at Westpac said it believed unemployment in Australia would reach 7 per cent. It now thinks it will hit 11.1 per cent by the end of June.
If that came to pass, it would be the worst unemployment rate since the end of Australia’s last recession and one of the poorest outcomes on record.
The reason it was forced into such a change is that so much of the economy is now going to suffer from the response to the coronavirus.
Every lockdown, every public health response, every effort at encouraging social distancing has an impact somewhere in the economy.
About a quarter of the economy, according to analysis compiled by AMP Capital, is going to suffer a big hit from the virus.
The immediate response of cafes, restaurants and coffee shops gives you an idea of the type of response – near-absolute closure.
It also includes retail (such as the who’s who of the local shopping market that are shuttering their doors this week) and the real estate sector, which is now unable to carry out auctions or open houses. Retail alone employs one in 10 Australians.
Outside of this group sits another 35 per cent of the economy that is likely to suffer a “moderate hit”. This includes the professional services sector (8.5 per cent of the workforce), manufacturing (7.1 per cent) and construction (9.2 per cent).
Then there’s the next 24 per cent of the economy that will either experience a neutral or slightly negative impact.
While mining accounts for the single largest economic contribution in this sector, it only employs 1.9 per cent of the nation’s 13 million workers. Education and training employs about four times as many people.
And then there’s the “lucky” 16 per cent of the economy that should do well out of this utter catastrophe. Unsurprisingly, this includes the healthcare sector, which also happens to be the nation’s biggest employer, with more than 1.8 million people.
A special survey by the Australian Bureau of Statistics – which is fast-tracking key data so policy makers can get a grip of just how the virus is affecting the economy – aligns fairly closely with this breakdown.
Half of the firms surveyed by the ABS said they had suffered a negative impact, with the hardest hit in the food and accommodation area. Over coming months, 86 per cent of firms expect to be affected.
It’s not just the Australian economy that is sinking into its first recession since 1991 and possibly its highest unemployment rate since the Great Depression. Ratings’ agency S&P Global says it’s clear the global economic hit will be “massive”.
“Analysts in the financial and official sectors are revising their estimates of global GDP growth for the first half of 2020 on a near-daily basis,” it said this week.
It’s best guess, this week anyway, is for a 6 per cent contraction of the US economy.
An economist with the St Louis Federal Reserve Bank has done a “back of the envelope” estimate of what might eventually happen. Miguel Faria-e-Castro said America’s jobless rate could end up anywhere between 10.5 per cent and 40.6 per cent.
Figures on Friday showed just how high unemployment could rise in the United States. Initial jobless claims – effectively people putting in applications for unemployment benefits – jumped from 282,000 last week to a record 3.3 million this week.
It would have been even larger but for technical problems across many states as they struggled to absorb the sheer volume of people looking for help.
Europe’s economy is expected to suffer the same sort of contraction, but because the coronavirus outbreak took hold there earlier it will take a bigger hit in the March quarter rather than the June quarter as is expected for the US.
China’s economy probably shrank through the first three months. Many optimists believe it is now on the road to recovery, but with overseas markets closed even the world’s workshop will find it difficult to return to work.
Over the past week more than 100,000 Australians have been stood down or lost their jobs. And that was before any potential full lockdown of the economy to the bare essentials.
The federal government has put together two stimulus and support packages worth a combined $84 billion. It is channelling $15 billion towards small lenders while the Reserve Bank is buying up government bonds – $18 billion so far – while offering a $90 billion pipeline of cheap cash to big banks to on-lend to small and medium-sized businesses.
State governments have put together more than $10 billion worth of support packages of their own.
That’s on top of the extra spending that will flow from federal and state budgets as economies slow and assistance flows to those without an income or who need health support.
But even that will not be enough. While the Morrison government is working on its third stimulus/support package and states look at ways to boost their already announced measures, the number of infections grow and the shutdown of businesses continues unabated.
When Scott Morrison and Josh Frydenberg announced their $66 billion second support package, the country had 1000 people with the coronavirus.
A week later there are now 3000 people with COVID-19.
Adairs has shut its doors. So too Kathmandu. So too Platypus. State borders have been shut down and Tasmania is effectively telling mainland Australians to leave the island.
The biggest shock to the nation’s health and its economy is just getting underway.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.