Consumer confidence fell a sharp 2.8% in the week ending 7 August. This is a surprising result given that the RBA cut the cash rate to a historic low of 1.5% last Tuesday. While the drop is disappointing, overall confidence remains well above its long run average.
The deterioration in confidence was relatively broadly based. Consumers’ views of their current finances fell a solid 2.4%, while their views on future finances fell a similar 2%.
Consumers were considerably more pessimistic on the near-term economic outlook. Households’ views of the 12 month economic outlook dipped a sharp 8.5%.
Views towards the economic outlook in the next 5 years also fell, but by a much more modest -0.8%. Consumers’ views towards whether ‘now is a good time to buy a major household item’ was largely unchanged.
This last chart is interesting, given the “blanks” the RBA seems to be firing with its rate cuts, with the uncertainty index now uncorrelated with RBA easing cycles:
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Maybe Mad Adam was right and we need some rate rises to stir those animal spirits? Or are consumers just stuffed full of stuff they don’t need?
