️ Highlights:
1. Consumer confidence in Australia dropped to its lowest level in 2024, following the Albanese Government’s decision to change the long-awaited Stage 3 tax cuts.
2. Consumer confidence has remained below the mark of 85 for a record 52 consecutive weeks. It is currently 4.3 points lower than the same week last year but still 4.5 points above the 2023 weekly average.
3. Consumer confidence was down in New South Wales, Queensland, Western Australia, and South Australia, but up in Victoria.
4. 19% of Australians believe their families are financially better off than last year, while 50% believe they are worse off. Looking ahead, 34% expect to be better off next year, while 32% expect to be worse off.
5. Buying intentions for major household items deteriorated, with only 22% considering it a good time to buy, while 48% believe it is a bad time to buy.
Overall, the article highlights a decline in consumer confidence in Australia, with concerns about financial conditions and economic outlook, as well as decreased buying intentions for major household items.
A Shift in Consumer Sentiment Following Government Tax Policy Changes
The latest ANZ-Roy Morgan Consumer Confidence Index has witnessed a decline, dropping 1.9 points to 82.5. This downturn in consumer sentiment follows the Albanese Government’s decision to revise the long-anticipated Stage 3 tax cuts, breaking a key election promise. This move has stirred public reaction, reflecting in the consumer confidence levels.
Consumer Confidence at Its Lowest in 2024
The current consumer confidence level is the lowest recorded so far in 2024, marking a continuous 52-week period below the 85-point mark. This persistent low sentiment underscores the impact of economic policies and government decisions on public confidence. Compared to the same week last year, consumer confidence is now 4.3 points lower, highlighting a notable decline over the year.
State-by-State Sentiment Variances
The impact of the government’s decision has been felt unevenly across the states, with New South Wales, Queensland, Western Australia, and South Australia experiencing drops in consumer confidence. Conversely, Victoria saw an uptick in sentiment, suggesting regional variations in the economic outlook and public response to federal policies.
Financial Conditions and Economic Outlook
The report details a mixed picture of Australians’ financial conditions and economic outlook:
- Current Financial Conditions: A decrease in the percentage of Australians reporting improved financial conditions over the past year, coupled with an increase in those stating their financial situation has worsened.
- Future Financial Conditions: Expectations for the financial future remain unchanged for some, with a slight increase in those anticipating worse financial conditions.
- Economic Confidence: A decline in short-term economic confidence, with fewer Australians optimistic about the economy’s direction in the next twelve months.
ANZ Senior Economist’s Commentary
ANZ Senior Economist Adelaide Timbrell commented on the findings, noting a softening in consumer confidence despite a rise in the four-week moving average to its highest level since early February 2023. Timbrell highlighted the equal-lowest inflation expectations since March 2022 and anticipated the upcoming quarterly CPI data to support a potential hold on interest rates in February, which could boost confidence, especially among indebted homeowners.
Conclusion
The ANZ-Roy Morgan Consumer Confidence Index’s recent drop reflects the immediate impact of political decisions on public sentiment. As Australia navigates through economic challenges, the government’s policy choices continue to play a critical role in shaping consumer confidence and, by extension, the broader economic landscape.