Sunday 22 April 2012

Why So Gloomy?

The latest consumer sentiment figures paint a very gloomy picture of how Australian consumers are feeling. The Reserve Bank Governor recently made the comment that foreigners seem to have a more positive view about our economy than we do.

The  figures show that consumer sentiment fell by 1.6% in April to an index of 94.5. That means that there are around 5% more pessimists than optimists.

It is difficult to know what we take from these figures because it is a survey of a limited number of Australians and we don’t know how pessimistic they feel, it may only be mild pessimism. However, it is interesting that consumers are now more pessimistic about their personal financials than they have been at any time since July 2008. Interest rates have fallen since that time and food prices haven’t changed a lot so we assume that price rises in things like electricity, gas, water and petrol are the culprits. Some say that lack of leadership from our politicians is also a factor.

All this doesn’t sound overly cheery for consumer-dependent businesses like retailers, but there could be a silver lining: many feel the Reserve Bank is another step closer to cutting interest rates.