We were happier during the COVID-19 pandemic. The reason is money

The COVID-19 pandemic challenged Australians in ways they hadn't been tested before: with curfews, mask mandates, border closures, restrictions on movement and the shutdown of normality.

Those severe measures may have helped keep Australians alive, but they also exacted a substantial toll in many other ways.

The shock is that data from the Australian Bureau of Statistics (ABS) suggests we were actually happier in 2020 than we are now.

"We're feeling worse about the world today than we were during the pandemic lockdowns," Terry Rawnsley, urban economist at consulting firm KPMG Australia, says.

"When you look at life satisfaction on a scale of one to 10, in 2020, when we're in the middle of the pandemic, life satisfaction was 7.2 out of 10. Last year, it was 7.1."

The ABS data shows how increasing financial stresses mean people feel less satisfied with their lives than when they couldn't travel more than 5 kilometres from their homes.

"There was uncertainty for sure. But it wasn't kind of the cost-of-living crunch that we're seeing now,"

Mr Rawnsley said.

"Real wages are lower than they were in 2020, median household wealth is actually flat over that five-year period, per-capita spending is also pretty flat, so it's no surprise people are less satisfied with their lives because they're feeling that financial pressure."

Real wages are your wage minus the impact of rising costs. So, if your salary goes up, but the speed of inflation is higher, your ability to use that money — your purchasing power — goes down.

For most Australians, that is what has been happening.

'Larger burdens' to making life work

The COVID pandemic was a world of individualism and screens, with people isolated behind masks and keeping their distance through Zoom calls.

It is the complete opposite of the warm and deeply analogue vibe in Melbourne store and craft workshop, That Paper Joint.

Selling pens and rolls of stickers before she sets up for a collage and journalling class, co-owner Zoe Crook promotes a calm and sense of togetherness at the shop in Brunswick.

"For myself, life is way more satisfying than it was in the year of 2020," she says.

What we can experience today is the opposite of the stark isolation of the COVID pandemic.

Stretching about 19 months from March 2020, that period was marked by uncertainty about health and the future. But not about money.

The federal government provided immense financial support through the first year of the pandemic.

It doubled most welfare payments and effectively ended poverty, creating the income support scheme JobKeeper to help businesses pay their existing employees.

Zoe's partner, Maximillian Malone, recalls 2020 as a simpler, easier time.

"I'm working harder these days to achieve a level of happiness. So, whilst overall I'm more satisfied, there's way more on my plate in to reach that level. So, larger burdens," he says.

Social contract feels a little bit broken

That sentiment makes sense to psychologist Sue Read.

"I think one of the challenges is that during COVID, people felt like there was a sense of togetherness and that there was going to be an endpoint," she says.

"I think when we look at these ongoing financial pressures, it feels like a chronic stressor."

Ms Read, of Life Unlimited, says unlike the time of the pandemic, our stress today now seems more individual.

"Although it was very distressing, we were having Zoom drink catch-ups, we were having financial support through the government, and there was this sense that there would be an endpoint," Ms Read says.

"I think we've seen the fabric of society dramatically change since then. It's been five years of a hard slog, with that ongoing unpredictability and uncertainty."

Quarter of people can't get $2,000 together

Data from more than 13,000 households informed the research. It was collected between May and June 2025, after the initial impact of US President Donald Trump's "Liberation Day" changes to global tariffs.

The surveys were undertaken before inflation started rising, resulting in the Reserve Bank lifting interest rates, and before the current Middle East conflict spiked oil prices.

A year later, the stress is very real.

More than one-in-five households report they would be unable to raise $2,000 within a week, up from 19.5 per cent in 2019. More than a quarter have experienced at least one cash flow problem, requiring them to dip into savings or take on debt.

"If the car breaks down, if the fridge breaks, or if there's an unexpected bill, there's one quarter of people who are feeling they can't raise that money," Terry Rawnsley says.

And the squeeze is most pronounced for those already vulnerable, such as single parents and young people.

"They're the ones that are seeing big rent increases, they are struggling to save mortgages, they try to pay off the home loans," he says.

"I think they're also probably feeling a bit of a squeeze about what's next in life for them: What's their career looking like? Can they afford to live in a home in Australia?"

Showing the impact of government decisions on Australians, there has been a slight improvement in the share of households reporting difficulty paying bills compared to 2019, which is likely due to state and federal energy subsidies during 2025.

More asked of people just to stay afloat

What the results show is how deeply linked social and economic conditions are, says Cliff Eberly, policy director at the Centre for Policy Development (CPD).

"During COVID, we saw this first-hand. We made really dramatic moves to keep people healthy so that we can keep our economy healthy," he says.

"And what we're seeing now is sort of the flip side of that, where we've got worsening economic conditions, and they're having an impact on social conditions."

But the response to these economic stresses hasn't been as consistent. Instead, people are trimming spending, working more hours or taking on extra jobs.

"Then it follows on that people are going to be more tired, they're going to be in more stress, they're going to be more chronically unwell," he says.

An extra factor in the uncertainty is large structural changes, like our energy transition and the dangers posed by artificial intelligence (AI) to the future of work.

"That's adding a lot on people's plate and adding to the stresses of daily life," Mr Eberly says.

Little things matter

Back at the store on Sydney Road in Melbourne, customers are browsing as Zoe and Maximillian pack mail-order items in the workshop.

"We have definitely noticed people more looking for small dopamine and serotonin hits," he says, describing the brain chemicals that affect feelings of reward and contentment.

"[They're] coming in for a couple of little stickers, maybe a cute little novelty postcard, something just to cheer them up in a bite-sized format that can be done incrementally and multiple times over a course of a month."

It's a long way from COVID, when the nation made hard choices to save lives.

Now it's the living that's hard.