COVID-19 puts final nail in consumer coffin

Monday 1 June 2020

If Friday’s private sector credit data from the Reserve Bank of Australia (RBA) showed one thing it was that COVID-19 has put a final nail in the Australian consumer’s coffin.

According to the RBA, the stock of personal credit was already in terminal decline. However, COVID-19 has sent it crashing through the floor, collapsing by 9.3% in the year to April – the biggest decline in recorded history:

As shown above, this decline in personal credit growth easily exceeds the troughs of the GFC (-7.8%) and the early 1990s recession (-6.0%).

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.