The epic crash in consumer confidence

It’s turning into an historic plunge for the put-upon consumer. From the weekly ANZ/Roy Morgan measure, down another 3.4 points to 100.4 today:

cc ScreenHunter_2495 May. 20 11.26

The third lowest print in thirty years! Some of this is bound to reverse but we’re not taking to our new economy too well…

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. interested partyMEMBER

    “We’re not taking to our new economy too well…”

    far worse to come….we have a bit of catching up(down?) to do with the rest of the world.

  2. What a classic. And all self-inflicted by our “adult” masters. Could they really have a worse effect on our national confidence than the GFC?

    • Well, considering that over the last decade the confidence fairy was firing on all cylinders because the government and banks slipped her a speedball of heroin and cocaine, one would expect her to need a rest eventually.

      With the budget, it appears that Abbott and company have given her a valium to soothe her nerves.

      In the near future, we shall see whether she goes home to little more than a sore head, or goes into convulsions on the sidewalk with vital fluids spraying from every orifice.

  3. The joys of debt based economies!
    Credit only brings forward demand, it need confidence (bull shit) to encourage more borrowing. When people stop believing the BS then you are in for a rocky road. Looks like house prices could start to take a dive I would expect a 35% correction over 3 years – it is going to hurt…

    • And there’s the kicker. The ‘seasonal’ fall in house prices currently underway might not seem so ‘seasonal’ soon.

    • Phil the engineer

      Sadly, I’ll believe it when I see it. I’m planning to buy a house later this year and would like the current stupidity to take a breather, but am not confident it will happen.

      Thank **** I don’t live in Sydney.

  4. BubbleyMEMBER

    Could we have the consumer confidence chart combined with an employment level chart?

    Many of the consumer dips seem to coincide with major business redundencies, ie Ford and Holden closures announcements.

  5. The consumer this year will not ‘lighten up’ the next big news story will be the increase/broadening of the GST.

    Consumer confidence correlates very well with house price movements but I would love to get a chart of consumer confidence vs investor mortgage applications!

  6. I keep banging on about this. To the extent that A&H succeed in selling their political line – that the country is in a bad way and to save the budget there must be biting income sacrifices – then A&H will succeed in talking down the economy.

    Every time Hockey or Abbott go on air to justify their evil cuts, they stoke consumer fear and talk us closer to a demand-led recession.

    There is a very clear contradiction between the ideological/political path chosen by the coalition and the better management of the economy.

    • This the problem with politicians from a law or investment banking background, thinking they are uniquely placed as economic managers. These are two professions that pretty much have their wealth handed to them on a plate by regulatory capture, nepotism, and a big sloshing barrel of easy money. They are uniquely hopeless at innovation and holistic thinking, and confuse their elevated status and sales technique with intelligence and competence. This is just the kind of budget and economic platform you’d expect from arrogant dolts in the thrall of the legal and investment banking professions.

      • Yes. Just like those politicians with union backgrounds – only union pollies have mastered the art of regulatory capture, nepotism and slushing around in the big barrel of easy money to the nth degree.

      • ..and yet have still managed to drive more valuable economic and social reforms in this country than any stained oak Cabinet of cigar chomping conservative plodders.

      • I posted this on another thread under Gunna’s threat to run for the senate, but it seems more appropriate here

        @ brieflyI find your comments to be the clearest, and least repetitive of the persistent commentators on this site. You should do summaries for Gunna. The MSM would definitely reprint what you provided.

        And if Gunna can’t be bothered facing the Morning infotainment crowd, or go on Q & A, Spleenbat should step in for him. I’d love to see Spleenbat opposite Christopher Pyne or Kevin Rudd.

      • “These are two professions that pretty much have their wealth handed to them on a plate by regulatory capture, nepotism, and a big sloshing barrel of easy money.”

        A good point. That is what they have experienced and so they think it applies everywhere.

    • I’ve been saying this for a while. We’re in retail and as soon as it became obvious that Abbott was going to win (i.e. about this time last year), things began to tighten up and spending stalled.

      If these stupid f****s don’t change their tune soon, we’re stuffed. Why they can’t at least say they can see a light at the end of the tunnel or something (after all they’re excellent at BS) and get everyone in a better mood, I’ll never figure.

      I suppose it doesn’t fit their ‘tough’ narrative.

      A virulent pox upon them.

      • J BauerMEMBER

        I remember people saying the opposit, that is, they were waiting for ALP to go before they committed to new spending and investment.

    • @JBaur

      That’s the difference between a crazed economic policy background and an understanding of consumer sentiment.

      Of course the business community was saying that… it’s conventional economic wisdom. I’m talking about Mr. & Mrs. average here. Unless A&H can persuade them that it’s not going to hurt, THEY’LL stop spending and no amount of business expenditure will lift demand.

      • And why would business invest when demand is not growing, other than for projects which will displace labour and have a fast payback period.

        And the unemployment such projects cause just causes more consumer concern and paradoc of thrift effects.

  7. I’m not sure who should be really worried here.

    The cuts to spending wont happen because they wont get through senate in the current form.

    Ultimately the services will be funded by a hike in GST.

    In the mean time the lower class will continue to cruise along not paying much tax and reaping welfare benefits.

    The corporates and super wealthy will continue to side step tax.

    Which leave the poor bastards in between to continue to pick up the bill.

    • drsmithyMEMBER

      In the mean time the lower class will continue to cruise along not paying much tax and reaping welfare benefits.

      Indeed. Living large on, what is it these days, $500 a fortnight ?

      Most people posting here probably spend that much on food and drink.

      • dumb_non_economist

        Hey Doc,

        Do you manage to not smash your head against a wall when you read shit like that?

      • drsmithyMEMBER

        Do you manage to not smash your head against a wall when you read shit like that?

        It certainly does test my faith in humanity.

  8. No surprise here. Reasons:
    – Abbott’s & Hockey’s changes of the budget (I presume especially their negative gearing plans).
    – Announced layoffs at GM Holden, Ford, Toyota, Quantas.
    – Record amount of consumer debt.

    Do I have to say more ……….

    • Phil the engineer

      Do they actually have any plans for NG changes? I remember Louis Christopher or someone dropping some hints pre-budget but have heard SFA since.

      • According to leaks the Abbott administration wants to limit negative gearing for newly constructed houses only.

      • I’m with you Phil.

        Not a mention of NG in the budget.

        It’s losses to the depths of economic self interest for the priveleged.

  9. 3d1k
    May 20, 2014 at 1:27 pm

    Yes. Just like those politicians with union backgrounds – only union pollies have mastered the art of regulatory capture, nepotism and slushing around in the big barrel of easy money to the nth degree.

    3d, this is the rhetoric of the lazy slur and you know it.

    Right now the management of the economy is in the hands of a bunch of nutters who plainly do not understand what to do.

    Every time A&H open their mouths they persuade some more punters to close their wallets. Their need for a political scape-goat – a need they themselves have created by their lies, broken promises and ideological fixations – is leading them to invoke fear in the suburbs, towns, mines and farms across the country. They have been in office for barely a half-year and have already just about wrecked the place. Unbelievable but true!

    As if this were not enough, A&H are committing themselves to months of economically suicidal argy-bargy with the Senate. They are a failure in real-time motion.

    • I’ve seen this a few times in consulting as well. When the lies get so icky, that all that are left are the rusted on machine men and women that are happy to perpetuate the scam for as long as possible, the next phase is a big big mess as all the crap unwinds. Sometimes it is hard to tell if they genuinely believe it or are just to greedy/stupid to care, but it seems to be the way, somewhere between going badly and total disaster there are alway a few people happy to perpetuate the system and the lies until the disaster.

      Played out with Gillard and will play out with Abbott, they are just the unconscionable ones still left flogging a rotten system.

  10. HealthyInvestor

    You guys should see the land sales volume and house sales volume data…

    Its worse than it was than the GFC

    I fully expect losses of 15% MINIMUM to housing over the next 6-18 months.

    Great time to buy if you’re cashed up 🙂 horrible time to sell. Worst time if you just bought.

    It leads the confidence data by 3-6 months so you can pick it well before the confidence indicators pick up a crash.

    • flyingfoxMEMBER

      Great time to buy if you’re cashed up

      Shall I tell the Mrs to start looking in Toorak? LOL