As we know, Australia’s consumption growth was already in the gutter in the December quarter, with household final consumption spending growing at its lowest rate since the Global Financial Crisis (GFC):
Blind Freddy can see that the January bush fires alongside the coronavirus will smash consumption over subsequent quarters. But alongside these stiff headwinds, we must also add the budding stockmarket crash, which has already wiped around 30% from Australian share values (All Ordinaries Index shown below):
According to RBA research released in March, household spending will also take a hit from the stock market crash. This research suggests that the sectors hardest hit will be motor vehicle sales, furnishings, clothing, utilities and recreation. Those tend to be the most responsive areas to changes in wealth:
