Photoshopped image credit: Pixy
As we head into Christmas, A newspaper reports that consumer confidence is at its lowest since 2012… which, you may remember, was the end of the GFC. quote.
Consumer confidence dipped in October as people fret about the future.
The ANZ Roy Morgan consumer confidence index fell to 115.4 in October from 117.6 in September. People’s optimism about their present situation lifted slightly to 122.0 from 120.2 but the future conditions index fell to 111.0 from 115.9, the lowest since late 2015.
“Consumers are feeling good about the here and now, but concerns about the future are clearly growing. Consumers haven’t been this pessimistic about their own and their family’s financial outlook one year ahead since mid-2012,” said ANZ chief economist Sharon Zollner.
Perceptions regarding the next year’s economic outlook fell 5 points to a net 1 per cent expecting conditions to deteriorate versus a net 4 per cent expecting an improvement in the prior survey. The five-year outlook fell 4 points to positive 14 per cent. end quote.
This is the effect of fuel prices. The prime minister simply cannot get away with claiming that petrol companies are ‘fleecing’ motorists with fuel price hikes when the government’s fuel taxes are such a big part of the price rise. And now that price increases are being seen everywhere, and inflation ticks upwards towards 3%, we are on a downward slide. Wait until interest rates start to rise. quote.
A net 11 per cent say they were better off now than a year ago versus a net 12 per cent in the prior survey. A net 20 per cent expect to be better off financially this time next year, down 7 points. end quote.
I don’t think many people will be better off in a year’s time. This downturn is starting to bite. quote.
“A key question is whether this growing concern about the outlook will lead to consumers reining in their spending. However, encouragingly for retailers, the proportion of respondents who think it’s a good time to buy a major household item increased and is at a level consistent with solid growth in spending,” Zollner said. end quote.
Or might it be a good idea to buy a major item now because they are only going to get more expensive? If you need a new fridge, buy it today. quote.
Inflation expectations were a tad higher with prices seen rising at an annual pace of 3.5 per cent during the next two years, up from 3.4 per cent in October but down from 4 per cent in August.
Zollner said ANZ’s confidence composite gauge – which combines business expectations and intentions with overall consumer sentiment – suggests a slowing in economic growth by year-end. end quote.
Economic growth is slowing already. The September quarter figures were not too bad, but they didn’t take into account the fuel price increases. Wait until we get the December quarter figures, at the end of January. We will start to see a very different picture then.
There is considerable evidence that people are deliberately using their cars less than they did. This can only be a result of spiralling fuel prices. Fuel prices affect everything. If people feel unable to use their cars, they will spend less everywhere. They may not go on holiday. They may not take the kids out for the afternoon. This means the discretionary spending will dry up… which means the hospitality industry starts to struggle. Which means fewer jobs for people with no qualifications and on it goes. The downward spiral has already started and ordinary people are already beginning to feel it