Roy Morgan consumer confidence tanks again

Roy Morgan/ ANZ weekly consumer confidence index has tanked again:

ANZ-Roy Morgan Consumer Confidence fell a further 2.4% to 103.7 in the week ending 11 May. Confidence has fallen sharply in the weeks leading up to today’s Federal Budget release and is down almost 11% over the past 3 weeks when various policy leaks began receiving significant media attention.

ANZ-Roy Morgan Consumer Confidence is now at its lowest level since May 2009. Although the current consumer spending environment is quite different to that during the Global Financial Crisis, recent developments suggest some possible softening in consumer spending going forward. Of note, the sub-index of confidence – perceptions of ‘financial situation compared to a year ago’ – which is most correlated with households’ spending decisions fell sharply last week (- 5.7%). While this series can be quite volatile, it has noticeably weakened over the past 2 months. ‘Financial situations next year’ also fell relatively sharply (-4.3%), although moves across all other sub-indices were more modest, particularly ‘economic conditions next year’ which was unchanged last week but is around 20% lower than three weeks ago.

I continue to see an element of this as Budget “sticker shock” that will pass but the falls are large enough to have macroeconomic consequences. There are big falls ahead for the Westpac index:

The Budget appears to have succeeded in braking down consumer confidence where falling housing prices in 2011 and the European crisis in 2012 failed.