We've never been here before, have we?
It was 1932 when FDR included in his election speech the famous words "the only thing we have to fear is fear itself".
We are long way from that time and there are plenty of reasons to be fearful. With borders all but closed, supermarkets employing security guards, schools closed and social distancing the new norm, Covid19 has delivered the greatest shock and forced the biggest changes to our way of life for nearly 100 years. We have no road map. We feel fearful.
So what previous experience can we draw on to help us find our place and guide our decisions? We may have never been here before but many of us have worked through major social and economic shocks like the GFC, last year's fall in Australian house prices or for those watching the UK at the time, their Brexit referendum.
That referendum is perhaps a better reference point because it was the behaviours of employers and consumers - against a background of ongoing uncertainty - that delayed major decision making. Business investment, churn in the housing market, new car purchases, the likelihood of an employee changing employer; these all fell in the 2 years following the BR. The fundamentals of the UK economy didn't actually change and nearly 4 years on, structural skills shortages are now worse than ever; driving wage inflation to its highest level for over 10 years and house prices are rising at near-record levels. (Car purchases remain subdued but a clear steer from the UK government on whether and when petrol and diesel cars will be banned is partly to blame).
It's understandable that in times of uncertainty we avoid making big decisions but what sort of opportunities were missed in those years following the referendum? It's also easy to look back with the benefit of hindsight and regret not making some braver choices which would have positioned ourselves better for the eventual recovery.
This piece isn't about "winners" and "losers". We face a health crisis. We need to look after ourselves and each other but we also need to insulate ourselves as much as possible from the risk of self-imposed economic damage. Fear can make us freeze and back away from making the decisions which help us to maintain a strong economy and keep people in work. Our fundamentals haven't changed. Fingers crossed we can be brave enough to see past the uncertainty that we face today.
#coronavirus #covid19