ASX investors are on tenterhooks as they nervously eye the ever-increasing number of people getting infected by COVID-19.
But that isn't the figure they should be watching. That are more important statistics that will determine how the S&P/ASX 200 Index (Index:^AXJO) (ASX:XJO) trades in the coming weeks.
These are the unemployment rate and the ominous (but recently forgotten) record household debt!
Deadly cocktail
On their own, they won't have as detrimental an impact on our economy. But mix them together and it has the potential to deliver a knockout blow that will be felt across almost every sector.
Pre-coronavirus pandemic, experts were warily eyeing the surge in Australian household debt to disposable income, which is the second highest in the world behind Switzerland.
The ratio stands at just under two times while housing prices to disposal income is hovering close to five times, according to the latest data from the Reserve Bank of Australia.
Is a surge in bankruptcies coming?
That's all and good when the unemployment rate is in the low 5% region. The latest figure from the Australian Bureau of Statistics is 5.1% for the month of February.
But economists believe this rate will jump and could go as high as 8%. If things get as bad as that, many could default on their loans and that will have a cascading effect on house prices and current consumption.
Cracks appearing
Early signs of stress abound! Qantas Airways Limited (ASX: QAN) is one of the many companies that have stood down most of its workforce and restaurants, clubs and bars are only just beginning to now that they are forced to shut or only offer takeaway service in Victoria and New South Wales.
A check with a mortgage broker contact confirmed that he's started getting calls from several of his clients who are worried about paying their mortgage as they've just been told to take unpaid leave.
Foolish takeaway
His normally upbeat persona has given way to a pessimistic view of what lies ahead even as the big banks, like Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ), are promising to give distressed borrowers a mortgage holiday.
Investors have to bank on goodwill from lenders, landlords and governments to do everything they can to ensure the jobless figure doesn't surge higher.
This is why it's probably more worthwhile for ASX investors to be watching the jobs numbers than the spread of the pandemic.
