Unpacking the retail goods spending spree in 2020

Today’s Sunday Mail includes a good article by Jane Armitstead on The best-selling lockdown products we had to have:

When the global pandemic hit, Queenslanders turned their focus to their homes and gardens with a boom in DIY projects.

Homewares stores and nurseries experienced the busiest influx they’ve seen in decades selling out of ‘must-haves’ including vegetable seedlings and potting mix.

Basically any products that are complements with leisure, broadly defined, experienced a surge in demand, so we spent big on products from Ikea, Bunnings, bike stores, and AV stores, among others. We also loaded up on booze from bottle shops and food and other groceries from supermarkets, while cutting back on meals, drinks, and coffees from restaurants, bars, and cafes, unsurprisingly due to the lockdowns (see chart below).

Retail turnover data from the ABS

Across Australia, in 2020, retail turnover was up 7% on average, and up 11% in Queensland (see chart below), but how was that possible in a year with a pandemic-induced recession? It was possible because the Government over-compensated households with the Coronavirus Supplement and with JobKeeper, boosting aggregate household disposable income by $85 billion or 6.6% in 2020, and because Australians couldn’t travel overseas, so billions were redirected to the domestic economy. Consider that, in 2018-19, Australian tourists spent $58 billion overseas, compared with the $39 billion foreign tourists spent in Australia, according to Tourism Research Australia’s Tourism Satellite Account 2018-19 (p. 1). But, as noted in my post from yesterday, as Commonwealth assistance is reduced (and as international travel hopefully starts up again later this year), retail trade should regress back towards the long-term trend and this will detract from economic growth to some extent. The economy was very challenging to forecast last year, and I suspect that will also be the case in 2021 as well.

Retail turnover data by state, ABS estimates

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com

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