The stone dead Aussie consumer

The Westpac Red Book is out and has special significance this month as the household recession deepens.

The Westpac–Melbourne Institute Consumer Sentiment Index continues to hold around very weak levels, dipping 1.3% over the three months to January. At 81, the Index remains in deeply pessimistic territory.

Cost-of-living pressures continue to dominate. The moderation in inflation and easing rate hike fears have so far done little to revive sentiment. Evidence from abroad suggests sentiment may not stage a rally until inflation is materially lower and the RBA has shifted its guidance on both inflation risks and the interest rate outlook.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.