Spending declines when they are in force, but the recovery is rapid. Timely data on spending suggest that the snap-back after the shorter lockdowns imposed in parts of Australia this year has been almost immediate. The big question for the outlook is whether the recovery is simply a snap-back to prior patterns of activity, or whether there is some make-up from the lost growth.
This is, in fact, the same question I addressed in that 2019 speech: when you hit an economic bump – whether it is a flood, a cyclone or a lockdown to control a pandemic – do you just return to normal, and the production that didn't occur during the bump is lost forever?