For many Australian’s, the memories of the last recession have been buried deep by almost 30 years without one.
Now that Australia is officially in a recession after two quarters of economic decline, the big question is – How will this affect the community moving forward?
A recession can be felt by an increase in unemployment, salaries declining, mortgage repayments being placed on hold or a reduction in household spending. And likely to be a combination of some or all of the above. Many of these things have already been experienced since the beginning of the COVID pandemic.
When people begin holding on to their pennies, unsure of when their next paycheck will be, or if their job is at risk, businesses feel the impact of the reduction in sales.
Economic data from previous recessions shows getting a job is significantly harder, especially for young Australians.
The 90’s saw youth unemployment peak above 20 per cent, a steep increase from the 1.2 per cent we generally see the unemployment rate* at.
For those lucky enough to hold their jobs, pay rises are unlikely with wages growing at their slowest pace in 22 years*.
With so many spending less than usual and many uncertain of their employment, it could be easy to assume that banks are hesitant to lend. And in the current economic environment, it is certainly harder for some to secure borrowings.
In the 90’s, the Reserve Bank of Australia (RBA) reduced their interest rates from 17 percent to below 5 percent over three years*.
Despite interest rates being quite low at the start of 2020, the economic impact of the pandemic has seen interest rates reduce even further.
In March the RBA cut interest rates twice to a record low of 0.25 per cent, with these rates likely to remain for several years.
What does the recession mean for me?
Watch our ‘Is the economy stuffed? Yep we are in a recession… so what’s your plan?’ webinar to find out what YOU could be doing right now, to make sure you and your family are financially secure during these uncertain times.
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Despite Australia being officially in a recession after two quarters of economic decline, the RBA left the cash rate unchanged at a record low of 0.25 percent during its October meeting. The big question is – How will this affect the community and you moving forward? Click here to read more on our service and book an appointment with our loan solutions specialists.
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