(Image: AAP/Dan Himbrechts)

Perhaps it’s Schrödinger’s recession. We are either in a recession or not. And we’ll know at 11.30 tomorrow when the Australian Bureau of Statistics (ABS) collapses the wave function, or at least reveals the national accounts for the June quarter.

What wasn’t even contemplated during the quarter itself — when we were chuffed with the strength of the economic recovery in Australia and economists forecast an early resumption of interest rate hikes — is now regarded as a distinct possibility: that the economy might have contracted in the three months to June.

Which, given the current quarter will be a wreck, means two quarters of contraction. Long before we find out if the December quarter contains any sort of bounce-back or a continuation of the economic disaster NSW Premier Gladys Berejiklian has brought upon us.

And which gives the June quarter results a curious status. They’re of great import as to whether we’re in a recession, but also of entirely historical interest given what has occurred since.

National accounts and the GDP data only ever show the economy’s past. And what happened in May this year has even less relevance than usual to what’s happening now. But there’s been a steady decline in the sentiment of economists about what we will find out tomorrow.

Shane Oliver, AMP’s chief economist, sees the economy contracting by 0.1% in the June quarter (still leaving annual growth over the 2020-21 financial year at a super strong 8.5%), and a fall of 4% in the current September quarter — the second steepest in history after the 7% slump in the June quarter of 2020.

Oliver is the most pessimistic at the moment but others have recently downgraded their forecasts to below 0.5% for the June quarter. Oliver expects the economy to bounce back post-lockdown, but not with the same vigour as last year. “Living with COVID” is going to act as a restraint on the economy, and we’re not even sure how quickly lockdown restrictions will come off, especially in Sydney where COVID is out of control.

Last Thursday saw the ABS reveal the damage done to jobs by the current lockdowns: the number of people collecting a pay packet across NSW slumped 7% since Berejiklian first hesitantly closed Sydney. That included a 3.7% fall just in the fortnight to July 31.

Across Australia there was an overall 2% drop in payroll numbers — and not just because the average was dragged down by Sydney. The number of people on payrolls in Victoria and Queensland fell by 1.3% in the fortnight to July 31 while it dropped by 2.7% in South Australia. It fell by 0.9% in the ACT, by 0.6% in Tasmania, while it was flat in isolated WA.

That’s the power of locking down the nation’s biggest economic centre, rippling out across businesses that supply it and the employers who make investment and hiring decisions based on it. Friday’s retail trade data showed a 2.7% fall in the month — led by a near 9% fall in NSW.

The only good news was the June quarter capital expenditure data — the most encouraging it has been for more than 18 months. Finally Australian businesses began opening up their balance sheets for a bigger-than-expected 4.4% rise in the June quarter — against market expectations for a 2.6% increase. This leaves business investment up 11.5% year on year.

The lockdowns will suck a lot of momentum out of that rise. But business has been calling for us to “live with COVID” for a long time — maybe it’ll walk the walk as well as talk the talk and keep on investing as we try to vaccinate our way out of a health crisis and an economic slump.