Important insights into a post COVID recovery

Understanding how Covid lockdowns have impacted certain individuals and industries, helps to inform us about how quickly the economy and markets may recover.With this in mind, I thought it was useful to share a number of charts published recently by the RBA and banks which provide important and interesting insights.Covid has discriminated against younger workers and lower income earners Workers between the ages of 15 and 34 account for more than half of the jobs lost (unemployment) to August.The RBA broke up changes to employment into five groups - from the highest income earners to the lowest earners. As the chart below shows, the lowest paid 40% of Australian's suffered the largest loss of employment (over 80% of the total jobs lost to August).It is not surprising to see that Covid has impacted a finite number of industries, especially hospitality and travel.The good news is that employment has recovered significantly between May and August - as denoted above by the dark-blue dots versus the light-blue bars.Those that have been less impacted have been saving money and repaying debtFor those that have not been materially impacted by Covid, disposable incomes have actually increased (mainly due to low rates), consumption has fallen (due to lockdowns) and savings rates has increased significantly.People have been making repaying large repayments towards credit card balances.And borrowers have been making larger principal repayments and/or accumulating more cash in offset accounts. So, overall, personal debt has reduced during Covid.Offset accountsSpending and confidence has rebounded strongly National consumer spending (using credit card data compiled by ANZ) is 8% higher than this time last year. Victoria has rebounded strongly. This demonstrates that the cohort of people that have not been impacted by Covid more than make up for those that have. Large spending increases have been observed in furniture, homewares and electrical categories.Consumer confidence (per Westpac/Melbourne Institute) is now at a 7 year high. It is likely that confidence has been buoyed by Australia appearing to now be Covid-free and people can now see past 2020, looking towards a Covid-normal 2021. The possibility of a successful vaccine arriving if the first half of next year also helps the global economic outlook.What does all this data tell us? (1) Higher earners will probably drive the property market recovery The above data demonstrates that there are two cohorts of Australians.The first cohort that has unfortunately been adversely impacted by Covid. These are likely to be lower income earners and younger Australian's. As such, it is less likely that they will be owners or prospective buyers of property located in blue-chip suburbs.The second cohort are those that haven't been impacted by Covid (or only to a minor extent). These are likely to be higher income earners, over the age of 34, have more savings in the bank (offset) and have lower debt levels as a result of spending less (thanks to lockdowns). It is this cohort that will probably implement their property plans (purchase, upgrade, invest) sooner rather than later. Historically low interest rates will also benefit this cohort to a greater extent, as they tend to have high levels of borrowings.(2) Higher spenders will drive the economic recovery Lower income earMy new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at [email protected]. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.