Consumer confidence falls again

By Leith van Onselen

The ANZ-Roy Morgan Research (RMR) consumer confidence index was down for a fourth consecutive week, falling 1.9 points to 109.8 in the week ended 15 February, to be tracking below the long-run average (see next chart).

ScreenHunter_6108 Feb. 17 10.27

Consumer confidence is now at its lowest level since early August 2014.

ANZ attributes the fall in confidence to concerns about job security, sluggish wages growth, and the economic outlook, which are outweighing the boost from the recent interest rate cut, lower petrol prices, and rising asset values (houses and shares).

Confidence in the economic outlook over the next year and over the next five years declined to the lowest levels since June 2014 – down 4.3% and 3.2% respectively. This is likely due to last week’s rise in the unemployment rate to 12-year highs, ongoing government instability, and the overall weakened outlook for the economy.

According to ANZ chief economist, Warren Hogan:

“The fragility of the consumer over the last year or so continues to surprise us. While we expect some bounce in coming months from lower interest rates, the question we increasingly debate is whether there can be a strong and sustained bounce in consumer confidence without an improvement in the labour market and a lift in wages growth”

The answer, Mr Hogan, is “no”. The economy’s woes are structural, and simply cratering interest rates and pumping asset values does not change this fact. Australian households seem to get this, so why don’t you?

The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index. Note the historically large divergence that was present has narrowed:

ScreenHunter_6109 Feb. 17 10.40

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    We have had the tops yesterday in Australia and the Asian region, and on Friday for the Continent and USA.

    Go short now, in a big big way. We wont see these high prices again for a long long time – Carnage ahead.

    This is not investment advice. Time traveler – UptownFunk. Now you know.

    • TTUF, I know you’re a big housing fan so I’m sure the date will be well in the future, but when should we expect (if ever) the housing market to top?

      • I think the top in the RE market is a factor of when all the drecky loans [pre and post GFC] are amortized by the super and international investors.

        After that their might be a bump just for bonus metrics and then nature takes over.

      • @AB

        Share-Market : You’ll see I called the Share-Market top on Friday already = refer ‘ASX at The Close’ ( Friday, the 13th, co-incidentally)

        Property : a long lag , normally about nine months from share top.

      • @UptownFunk weren’t you talking about going long property yesterday? How can you get in/out in time for an approx 9 months peak and make enough CG to meet expenses?

      • @Andy!

        Property entry date UF = Not yesterday, late last week … you can go and check …

        Entry mechanism into property : Options

        Conclusion : Rapid magnified option price explosion between late last week and nine months time.

        Epilogue : F#*k , you good UF, real good

        PS : Market down by about 40 points since my Friday call. At $25 per point on short futures = $1,000. And you still don’t believe I’m a Time Traveler ?
        As Farrel Williams sings: ” Don’t believe, just watch”

  2. “Australian households seem to get this, so don’t you?”

    Rising unemployment, slowing wages growth, businesses looking to cut costs, an uncertain global outlook and an unstable (and at times bizarre) federal government that seems to think half of as are parasites..

    Why wouldn’t consumers be confident?

    • and a PM and Treasurer screaming “debt and deficit disaster”, “austerity”, “pay down debt” etc at every opportune moment to a debt soaked public. What the fuck did these clowns think was going to happen? Morrison at the end of his woeful interview on AM went on the budget disaster rant to justify making kids wait 6 months for the dole but was ok for retirees with $2m in the bank to claim welfare.

      What was with Stevens logic that cutting rates “might” help consumer confidence? Hope is not a course of action. The punters are tapped out. Even if their assets are worth more there’s little in the way of capacity to repay debt, they can’t accumulate debt indefinitely. We’re si fucked over by those who should know better but clearly don’t.

    • ha exactly… let’s not forget the cash rate though: borrowers are stoked at what they perceive as a temporary “score” meanwhile savers have yet again had their income slashed by 10%, let alone all the double digit income slashes since 2011 on too-low rates anyway.

  3. Prime age consumers are young and middle aged – both of which are struggling under the debt burden of the Baby Booemr realestate bubble.

    I doubt we’ll see consumer confidence return to its hey day while house prices become ever more unaffordable.

    • +1 prices need to revert before this confidence measure is representative. Once they bottom at 50% from now (maybe a tad more due to market forces) confidence can return. Stability leads to confidence. Bubble prices at lowest interest rates in history are inherently risky and unstable.

  4. “The economy’s woes are structural, and simply cratering interest rates and pumping asset values does not change this fact.”

    Ok – so which one is it exactly:
    A) You think rates should go up/hold but WILL go the other way?
    B) You agreed with the recent cut (SHOULD have happened) and agree with the market that there should be another?
    C) You change your narrative on a daily basis?