The Australian’s Robert Gottliebsen claims that the sharp fall in consumer spending in the wake of Mother’s Day is being led by affluent Australians, namely those that are not impacted by mortgage or rent stress.
This group is purportedly curtailing its spending due to economic caution, as well as the national interest to help people who are experiencing mortgage stress.
“They realise that unless their spending is curtailed, interest rates will not fall and the suffering will intensify”, Gottliebsen argues.
“They have sympathy for those suffering mortgage or rent stress, especially as almost all the journalistic commentary, including mine, concentrates on this stressed group”.
“[Their] spending restraint is a confirmation of the wonderful people that inhabit our land”.
The group Robert Gottliebsen is clearly referring to are older Australians (mostly baby boomers) that own their homes outright and are not paying rent.
This group amassed a $160 billion war chest of savings over the pandemic:
Many are now also benefiting from higher interest rates on savings, while those that own investment properties outright are enjoying record increases in rents.
Gottliebsen’s claim that this group is cutting back hard on spending seems heroic, given an examination of seven million CBA members’ purchasing habits showed that older Australians had increased their spending by far more than inflation in the year to 30 March:
Source: CBA Economics
CBA’s data also showed that the considerable increase in spending at cafés and restaurants reported by the Australian Bureau of Statistics was driven by older cohorts, who spent 18% more on dining out than the previous year, compared to a 7.1% increase among under-35s.
Viewed in this light, Robert Gottliebsen’s claims look suspect; although we need to see the CBA’s data updated to the June quarter to be definitive.
