A surging sharemarket is paying no attention to any of the economic warning signs about the months ahead, even though the outlook is much better than Treasury had predicted.

But now that the domestic health crisis of COVID-19 has been vanquished subject to the prospect of a spike two weeks after the weekends crowded street protests arguments over the best economic course to follow will only intensify.
This is broader than the brawl between Annastacia Palaszczuk and tourism operators, backed by Scott Morrison, over the need to open Queensland borders, or Chairman Dans determination to keep Victorians away from offices for at least the rest of June.
The fact the Australian economy has performed better than initially feared … doesnt provide many guarantees about future prospects.
It goes deeper too than Treasurys overly pessimistic assessments in late March about the extent of the shutdown needed for health reasons and therefore the economic impact and likely demand for JobKeeper payments.
As Finance Minister Mathias Cormann told the COVID-19 Senate Committee on Tuesday, Treasury estimates were made at an extremely uncertain time in a fast-evolving situation and before it became clear how well Australia would do in containing the virus.
But it does demonstrate the future complicated choices and contradictory forces for the Morrison government trying to encourage economic recovery, particularly when private sector investment was flagging well before the world had heard of COVID-19.
Of course, the ASX optimism is largely riding on the strength of the US market, particularly a surging tech sector along with better than expected jobs growth.
Yet even without anything like a corresponding level of big tech stocks, despite runaway successes such as Zip and Afterpay, Australias heavy reliance on staples like the miners has provided a reliable buffer for market confidence.
Some other more traditional businesses have also experienced surging results due to rather than despite COVID-19.
In a trading update on Tuesday, Wesfarmers reports Bunnings’ sales have jumped nearly 20 per cent so far in 2020 as customers rushed to renovate homes and gardens, while Officeworks sales soared almost 30 per cent as people bought so many more computers and desks to work from home.
Even that was not as dramatic as the 90 per cent lift in retail e-commerce sales across all divisions as consumers moved online in order to avoid the shops.
Long queues have become the norm outside Bunnings during the pandemic.  Wayne Taylor
But how long overall market buoyancy will continue given underlying economic conditions remains one of the many unknowns even in a data-rich world.
The National Australia Bank survey of business conditions last month shows improvement, for example, but these remain deeply negative overall, with the services sector the weakest of all.
Business confidence is also better than it was in March, the NAB survey found, but it is still around the trough of the 1990’s recession, with all industries expecting further deterioration in conditions.
Unsurprisingly the employment index which appears to have stabilised and capex remain very weak. Both indicators point to ongoing restraint in the business sector with respect to hiring and expansion plans, NAB notes.
The need to counter this caution explains the governments willingness to expand and extend by six months its instant asset write-off program for businesses with turnover less than $500 million to the end of 2020.
That is although Canberra has made the unpopular decision to shut down access to free childcare and JobKeeper payments for the childcare industry ahead of schedule as demand returns to 75 per cent and the economy reopens earlier than anticipated.
The Australian Industry Group, among others, welcomed the extension of the asset write-off program as an immediate potential boost to business investment over the next few months”.
It will particularly help businesses that had put investment plans on hold or that are looking to reposition in the wake of the COVID-19 crisis, AiG chief executive Innes Willox says.
But bolstering investment and the confidence underpinning it will inevitably require plenty of additional measures and guesswork by the government in the October budget, as well as by the business community in the coming months.
What happens when the artificial stimulus of JobKeeper payments officially finishes for a few million people in September, for example? And when the six-month loan deferrals for hundreds of thousands of bank customers come to an end around the same time?
The fact the Australian economy has performed better than initially feared and much better than most other countries doesnt provide many guarantees about future prospects.
Treasury Secretary Steven Kennedy concedes the significant shock created in what he calls an “unknown economic country”, but is still hopeful of avoiding the cycle of destruction where many businesses close down completely. Avoiding this would enable a much quicker recovery, he told the Senate committee.
“Business and consumer confidence is returning. We are well ahead of where I imagined we would have been in March.”
That also means he expects the official unemployment rate to be about 8 per cent in September rather than the 10 per cent predicted, although stressing the uncertainty around such numbers.
Assuming I can make customer quota numbers, I am headed to the pub to discuss at length. Cheers.