Cash is dead — long live the card. Or so we’re led to be believe by data showing virus-wary consumers and businesses turning their backs on cash and embracing tap-and-go as the default payment method in cities and towns across Australia.
But one indicator suggests cash remains popular for a particular purpose — and that reflects just how worried Australians are.
The value of notes on issue has surged, according to the Reserve Bank’s latest statement of assets and liabilities. And it seems those notes are being hoarded, not spent. Last week, there was $90.433 billion worth of cash on issue from the RBA. That’s 13% more than the $80.041 billion on issue in the same July week of 2019.
The surge really began in February — since then, notes on issue have risen 8.5%, including an increase of $271 million alone last week. That’s a rise of $1.6 million every hour of the week. That demand has forced the Reserve Bank to run its note printing business faster and harder.
Remember that all of the additional support flowing into households — JobKeeper, JobSeeker, early access to super — has been via electronic deposits into bank accounts. Many supermarkets have also stopped the issuing of cash via their checkouts. People have thus had to go to banks and withdraw cash — remember that? — either through ATMs or over the counter.
But they’re not using it to pay for groceries or other purchases — most likely it’s being kept at home, waiting for the worst case scenario feared by many to unfold.
Despite claims of a turnaround in employment, yesterday’s jobs data shows why households have some justification for their concerns. While over 200,000 jobs were added in June — all of them part-time — that’s nowhere near enough to make up for the hundreds of thousands of jobs lost since April.
But people re-entered the jobs market in search of them, pushing unemployment up to 7.4% nationally. That rise in the participation rate will play a crucial role in how the headline unemployment rate fares in months to come, because the more people who re-enter the workforce looking for a job, the more jobs need to be created to get unemployment down.
And those 200,000-plus jobs weren’t new — they were old jobs restored as most parts of the economy leave lockdown. That’s why they were entirely part-time jobs, as hospitality and retail reopened.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
So at the moment we’re getting the worst of both worlds — we’re only restoring some of the jobs that were lost a couple of months ago, but people who’d given up looking for work are being drawn back, pushing up the unemployment rate. That people are more prepared to look for work is good, but the result is ever-higher jobless numbers that will have their own impact on consumer confidence.
Moreover, both Victoria (7.5%) and Queensland (7.7%) are above the national average, while South Australia and Western Australia are both near 9%. Needless to say, all of this is before the outbreak in Melbourne and the ensuing lockdown.
Already grim job numbers will get grimmer still. It’s unsurprising that so many households think keeping some cash under the bed right now is the prudent course of action.
What about the economy is worrying you — and are you tempted to stuff some cash under the mattress? Let us know your thoughts by writing to [email protected]. Please include your full name to be considered for publication in Crikey’s Your Say section.