For many Australian, seeing massive queues outside Centrelink offices is an unwelcome but absolutely novel sight.
After almost three decades of uninterrupted economic growth, the sharp lurch into recession that arrived in the form of the coronavirus is something that they have simply never experienced.
For others with a few more grey hairs it brings back unpleasant memories from recessions past when unemployment spiked into double figures and stayed there for many years – with many young people in particular spending a long period living on fairly austere unemployment benefits as they waited for their first job.
Job market suddenly turns very tough
This crisis is different in how it came about but is fairly similar in the end result, with thousands of workers rapidly laid off and the job market all of a sudden turning very difficult.
By the end of this crisis, some companies will just be a memory as hopes and dreams end up on the scrapheap.
Troubled swimwear brand Tigerlily is arguably the first of many, with the company blaming the coronavirus pandemic for a drop in sales which saw KordaMentha appointed as administrators on Monday.
KordaMentha administrator Scott Langdon is now trying to save the business which employs about 200 people and has 30 retail stores and online sales.
Tigerlily exposed as shoppers stop buying
Mr Langdon said the coronavirus was a “core reason” for Tigerlily’s collapse.
He said the business would continue to trade and a buyer would be sought, although some stores would close.
Tigerlily was originally famous for its skimpy swimwear and was founded in 2000 by model Jodhi Meares, who is also the former wife of billionaire casino mogul James Packer.
It’s now owned by private equity company Crescent Capital Partners, who bought the company for $60 million in 2017 from former owner Billabong, who bought the label from Ms Meares in 2007.
Airlines need to be propped up to survive
Tigerlily is by no means alone in hitting significant troubles with regional airline Regional Express (ASX: REX) saying it will ground all regular passenger services outside of Queensland in a fortnight unless state and federal governments cover the company’s losses caused by the coronavirus pandemic.
That would remove the only air transport links with some regional communities which is why Rex is seeking urgent government help to keep it flying.
Even the larger airlines Virgin Australia (ASX: VAH) and Qantas (ASX: QAN) have been placed under severe pressure by the pandemic and have slashed flights and laid off huge numbers of workers to boost their chances of survival.
Similarly, other travel companies and cruise ship owners have also suffered a dramatic downturn in demand.
Banks and buy now, pay later companies feel brunt of the downturn
Australia’s financial sector is also under extreme pressure with shares in buy now pay later companies such as Afterpay (ASX: APT) and Flexigroup (ASX: FXL) plunging as investors how the payment system will fare in a recession.
Even the big four banks have come under severe pressure as investors ponder their current low level of bad debts suddenly spiking dramatically as businesses large and small stop paying back their loans.
Traditionally banks have a terrible time during recessions and this time looks like being no different as bad debts quickly pile up and the banks end up owning a lot of difficult to sell property and businesses.
Similarly, real estate stocks have been hammered on the share market as investors anticipate rents falling and vacancies rising sharply.
It is probably appropriate that a company famous for skimpy bikinis was the first to fail due to an unexpected virus causing the economy to skid to a halt but there will be plenty of other companies left even more exposed by the time this recession is over.
The really tough task for investors at the moment is to pick those companies that will not only survive but thrive in the tough times that have suddenly arrived on our shores.