Why the RBA’s coronavirus recovery may not materialise

Why the RBA’s coronavirus recovery may not materialise, by Robert Gottliebsen.

The Australian population is in deep shock.

Reserve Bank governor Philip Lowe says we are facing the biggest fall since the depression. While that’s true, as I pointed out on Friday, the speed of this decline has no parallel since Federation.

Lowe believes that if restrictions are eased we could expect the economy to begin its bounce-back in the September quarter and for that bounce-back to strengthen from there. …

I hope you are right Philip, but I fear you are wrong. Falls of this magnitude don’t snap back and take a long time to recover. I can still vividly recall in 1961 — the year you were born — being mentored by the first editor of The Australian Financial Review, Jack Horsfall, who drummed into me the message that when the flower of confidence is crushed, it takes a long time to bloom again.