What Does the Recession Mean for Me?
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*.
What about interest rates?
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.
Want to learn more on what a recession is and could mean for Australia? Read our article here.
We are in a recession… so what’s your plan?
Modoras are committed to making sure you’re making the most of opportunities in the current economic climate. Contact us on 1300 888 803 or click here to book a catch up with a Modoras Professional.
Want to know more?
With Government announcements on support schemes happening often, we are continually updating our resources for you to stay informed. To review the latest materials on COVID-19, please click here. This page will be regularly updated, so please check back in from time to time.
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- Accessing Super Early: What Your Future Self Would Tell You
- How to Apply for Early Super Access
- Are You Investing for Income or Capital Growth?
- You Can Be Young Without Money, But You Can’t Be Old Without It
IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (Number 233209). The information and opinions contained in this presentation is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. Any individual making any investment or borrowing decisions should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to borrow funds or purchase, sell or hold any particular investment. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of, credit contract entered into or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog may change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.