Why is Everyone Surprised at Our Speedy Recovery?

IF YOU REMEMBER back to last May and June of last year, I explained that the economic decline caused by COVID was quite different from any other recessions.

What we experienced was a Medical Crisis with economic implications. As opposed to a total collapse of the Financial System – as you experienced during the GFC.

In such circumstances, Demand doesn’t disappear … it’s simply gets deferred.

Over the past year, the number of people employed rose by 74,300 – with the unemployment rate falling to 5.6%.

The participation rate also rose to a record level of 66.3%, as the proportion of women entering the workforce grew at more than five times the rate of men.

Furthermore, strong job growth saw the S&P/ASX 200 index rise above 7,000 for the first time since the record high of 7,162.5 in February last year. And the really good news is that fewer people than expected have sought welfare, after JobKeeper came to an end.

This has led to an increase in business investment, and the highest level of consumer confidence for 11 years.

Bottom Line: Whenever people become confused or concerned (as they did during 2020) … they tend to do nothing!

However, now COVID appears to be more or less under control … people have once more resumed activity, and are now frantically playing catch up.

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