The ANZ-Roy Morgan consumer confidence report has been released, which reveals that confidence has crashed GFC-style:
Despite all the gloom last week, confidence only fell marginally. It is, however, at its lowest level since 2009. This is the more important point. The weakness was predominantly due to another sharp drop in the current economic conditions subcomponent. This component is now approaching the lows seen during the GFC.
The divergence between financial and economic conditions remains large. The labour market will likely determine how that gap is closed, which makes this week’s employment data important. We are expecting bad news, with an outright drop in employment likely. Offsetting this may be a further stimulus package from the Commonwealth Government, which will add to the fiscal stimulus now being delivered by a number of states. The RBA is also set to cut to 0.25% and announce QE on Thursday.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
