From BS:
An annual global survey of consumers by Boston Consulting Group (BCG) found that of 2,502 respondents in Australia, nearly half, or 46 per cent, said they prefer to save rather than spend, up from 40 per cent last year.
In general the survey noted a creep in consumer behaviour among Australians. Some 54 per cent reported being less inclined to buy new things, up from 49 per cent of Australian respondents last year.
…Many said their behaviour was driven by a need to try and meet the costs of retirement and healthcare.
“Many Australian consumers have effectively gone on strike,” BCG’s Jane Danziger said.
Hmm, I don’t think this is the right or useful terminology. Consumers aren’t on strike. They are doing what they should be in circumstances. Indeed, it might be argued that they have no choice. Look at this chart from UE yesterday of disposable income versus retail turnover:
The fact is retail sales outstripped actual income growth during most of the consumption then mining boom. Now incomes have plateaued and may fall as the terms of trade corrects.
To conclude consumers are choosing to “strike” lets consider the counter-factual, that consumers had kept borrowing to fund consumption. That would have meant lower savings. Banks would not have had there liabilities rebuilt on deposits. They would still be borrowing more offshore to fund households. Their ratings would be falling and the cost of funds rising.
It’s not a strike. It’s essential balance sheet repair, it’s not over and is about get harder as incomes remain under pressure.
