Things are getting better, but… (with more just-released evidence)

Victoria has re-joined all other Australian States by ending its COVID-19 lock-down.

The Reserve Bank thinks that Australia is now technically out of recession (1).

But the underlying psychology is less positive.

This less positive mindset is demonstrated by these findings:

  1. The Australian Bureau of Statistics (ABS) reported that in 2019, more Australians had cash flow problems than five years before – 22% – compared with 19% in 2014 (2).
  2. The ABS October 2020 Household impact of COVID-19 survey found that 16% of Australian households felt their financial circumstances had worsened because of COVID-19 (3).
  3. The Reserve Bank of Australia reported a 4% increase in household deposits between December 2019 and June 2020, up on the past three year average of 1% a quarter  (4).
  4. The Australian Prudential Regulatory Authority notes that Australian residents’ deposits with ADIs have risen 11.5% since February 2020 (5) and that
  5. “Cashed-up Australians have squirrelled away $100 billion in their bank accounts since the start of the coronavirus recession as they remain fearful the pandemic will weigh on the economy and their own finances well into the future”  (6)
  6. The recovery period, for a COVID-19 infected-person, if they recover, can range from two weeks for a mild case to perhaps six or more weeks for severe cases.  (7).  
  7. The recovery time required for those potentially unable to work poses a problem.  Again, as the ABS notes, 18% of people with a job did not have enough paid sick leave to take two weeks leave, and 33% had no access to paid sick leave (3), so paid COVID-19 sick leave for recovery is out of reach for many.

This extensive background makes Melbourne University Professor de New’s just released Australians’ Financial Wellbeing Study finding that there is an increase in precautionary savings, unsurprising  (8).

The increase in precautionary savings can be reflected in a renewed mindset and practice that sees:

Reductions in smaller value spending.  Perhaps fewer purchased coffees or accompanying indulgence foods, or other retail purchases, or the

Deferral of larger purchases, such as homes, renovations or cars, which usually require borrowings to finance them.

The business issue is how to respect customers and prospective customers’ precautionary mindsets while encouraging them to shop more with you or to advance their larger, financed purchases. 

Our role is to help you by telling you your customer-action motivating insights.  

If clarifying those in this changed mindset times can help you to strengthen your business, please call or email Philip Derham, on (+61) 0414 543 765 or email – derhamp@derhamresearch.com.au .

Notes:

(1)  https://www.afr.com/policy/economy/the-recession-is-over-rba-20201027-p5691s 

(2)  https://www.abs.gov.au/statistics/people/people-and-communities/general-social-survey-summary-results-australia/latest-release#methodology   

(3)  https://www.abs.gov.au/media-centre/media-releases/covid-19-continuing-impact-workers-and-families 

(4)  https://www.rba.gov.au/statistics/tables/

(5)  https://www.apra.gov.au/sites/default/files/2020-10/Monthly%20authorised%20deposit-taking%20institution%20statistics%20highlights%20September%202020.pdf

(6)  https://www.theage.com.au/politics/federal/cashed-up-australians-squirrel-away-100-billion-20201030-p56a4m.html

(7)  www.webmd.com/lung/covid-recovery-overview

(8)  https://www.youtube.com/watch?v=kqv143vBM4Y&feature=youtu.be