Dave Zan
Active Member
I think the answers are nuanced and a bit contrary to commonly held views and not as simple...
... So you can have bad employment numbers and the economy still not enter a recession or depression.
I am not...heartless or cruel here. Just...the reality...
That is indeed a nuanced, excellent post that deserves a considered response.
So I waited a few months to have some actual data because I have read too many rubbish, fact-free Covid posts to want to add to the list.
Firstly, your post did not strike me as heartless or cruel but rather as almost classic Marxist.
That's no criticism, I have often noticed serious financial journalists use quite Marxist analysis.
They differ from Marx only in their moral position whether inequality is problem or an opportunity.
I know "Lefties" whose preferred news source is the Wall Street Journal.
So, as to the correct measure of "The Economy", I think the best choice is probably GDP, year on year.
GDP is a blunt instrument but at least it's widely available and fairly consistent, especially from year to year of a particular country
It is also less prone to some of the problems you mentioned of asset price distortions and so on.
I first compared Australia and Sweden, after some commentators confidently predicted that the Australian Covid precautions would disastrously impact the economy compared to less restrictive countries.
Hmm, Australia GDP fall for 2020 was a comparatively small 1.1 % (Australian Bureau of Stats data) versus 2.8% fall for Sweden (Statistics Sweden).
And the Covid death rate in Australia is almost 40 times lower, tens of thousands of deaths less.
I don't want to look triumphalist about Australia so next looked at China because their death rate is an order better still.
China GDP didn't even fall, it actually increased by 2.3 % (BBC report of preliminary data)
The obvious comparison is the US, a fall of 3.5 % (CNBC report) and a death rate about 500 times worse.
Taiwan (best major economy in the world both GDP performance and Covid death rate) and UK (worse major economy in both) just confirm the trend.
So how has the mostly successful Covid response and consequent comparatively mild economic impact played out in Australia?
The main effect to many people has been a remarkable real estate boom.
Not what I initially expected, to say the least, but economic stimulus measures have combined with limited options to spend the money - no overseas vacations, no cruises, limited restaurants etc.
So people have piled into real estate.
I am pretty happy with that, I would have been morally conflicted to profit from additional people's deaths.
Not sure I could buy, say funeral company shares.
But the increase in the value of my home makes me feel better even if it's mainly a paper win.
I suppose that's a positive note to finish on but I'm not quite sure what people in other countries can take from this.
That the best economic action is actually not investment advice but rather not to believe or enable denialist political bull shit?
Best wishes
David
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