New data released today by illion shows how the Australian government’s textbook stimulus response offset falling spending in the rest of the economy.
During the COVID pandemic Australian consumer spending dropped very rapidly – down 21% below normal levels at the height of the pandemic.
In response, the Government implemented a strong set of stimulus measures. These stimulus measures helped support overall spending in the economy.
Throughout April and July, the increased spending from recipients of government support helped to offset falling spending in the rest of the economy.
In the last two months, spending has returned to normal for people who did not receive support – which is the textbook outcome stimulus is supposed to achieve.
Without this stimulus, the economy would have fallen much further.
Government Achieves Goldilocks Result
The Government’s stimulus for consumers has been effective in filling the gap in household spending during the height of the crisis. Achieving this outcome is like landing a plane on top of a lorry. It’s the classic Goldilocks result.
While we need to continue to be vigilant to ensure that households don’t go backwards, this is a textbook use of stimulus and it has certainly worked.
As the stimulus is slowly wound back, it is going to be very interesting to see where we all end up. What has stayed the same – and what has changed forever?
Through illion’s real-time tracker, we will be keeping our finger on the pulse and will call out any permanent changes – and how they affect the lives of everyday Australians.
Further high-level summary data is available here.