Tax cuts, rate cuts ignored; households worried

10 July 2019

After a lengthy divergence between consumer sentiment and business confidence in Australia which began in 2014, the two sectors converged again around July 2018. Currently, both measures are at slightly negative or below-average levels. This latest measurement of consumer sentiment indicates household confidence has reverted back to the somewhat-depressed levels present from mid-2014 to mid-2017.

 According to the latest Westpac-Melbourne Institute survey conducted in early July, average household optimism has dropped below neutral levels and it is now in negative territory. The Consumer Sentiment Index continued on from June’s modest fall, this time with a larger drop from 100.7 to 96.5. Any reading above 100 indicates the number of consumers who are optimistic is greater than the number of consumers who are pessimistic. The long-term average reading is just over 101.