Australian families now have serious fears for the future, with consumer confidence plunging to its lowest level since the crippling 1991 recession, new data has revealed.
Australians fear the economy is on the verge of a major crash, with just 10% believing there will be “good times” in the next five years.
The dire outlook is the worst on record since the start of the ANZ Roy Morgan consumer confidence survey.
Australian families now have serious fears for the future, with consumer confidence plunging to its lowest level since the crippling 1991 recession, new data shows
The survey also recorded its biggest week-over-week drop in 30 years, excluding the pandemic, amid rising inflation and interest rates.
Overall consumer confidence fell 7.6% to 80.6 points in just seven days – down nearly 30 points from a year ago – after the Reserve Bank raised interest rates. interest of 50 basis points at 0.85%.
Only the figures for the darkest times of the spread of Covid across the world in April 2020 were worse.
Those numbers quickly rebounded as a pathway out of the pandemic emerged and hope returned.
But now Australians see only a bleak future as the delayed impact of Covid spending, global inflationary pressures and Russia’s war on Ukraine wrecks the nation.
Australians fear the economy is on the verge of a major crash, with just 10 per cent believing there will be ‘good times’ in the next five years
Inflation should reach 6 or 7% by the end of the year and interest rates should climb to at least 2.5% within a few months.
The war in Ukraine has seen fuel and electricity bills soar, while the disastrous La Nina floods that destroyed Australia’s east coast sent food prices soaring.
Now economists are warning that a ‘disastrous state of sentiment’ is spreading across the country as families see no short-term solution to the looming crisis.
“Outside of the pandemic, consumer confidence has not been this low since January 1991, in the midst of the early 1990s recession,” said David Plank, head of Australian economics at ANZ.
Almost twice as many people said they were now worse off than a year ago compared to those who said they were better off.
And around three-quarters don’t think they’ll fare any better this time next year, and almost 40% expect “bad times” in the coming year.
Almost half of those polled thought it was a terrible time to buy major household items right now, while less than a quarter disagreed.
The dire outlook is the worst on record since the start of the ANZ Roy Morgan consumer confidence survey
But Mr Plank said consumer spending had so far remained firm, even as families grew concerned they would be forced to tighten their belts.
“So far this year, household spending has held up despite weak consumer confidence,” he added.
“The RBA, for its part, will closely examine whether this divergence can continue.”
The Australian stock market continued to fall on Wednesday after a massive 3.6% drop to close at a 16-month low on Tuesday.
And the Australian dollar is also at a five-week low against the United States, buying 69.10 US cents from 69.54 US cents at Tuesday’s close.
The study comes as the Fair Work Commission on Wednesday announced a dramatic 5.2% increase in minimum wage and 4.6% in awarded wages.
“There has also been a big increase in the cost of living since last year’s review,” admitted FWC Chairman Iain Ross.
“The outlook for inflation is also significantly higher than expected three months ago.
“Headline inflation is now expected to peak at around 6% in the second half of this year, in part due to higher gasoline prices and a sharp rise in the cost of new housing.”
He added: “Current circumstances warrant an approach that provides a greater level of support for low wages while seeking to contain inflationary pressures.”
The announcement was welcomed by union boss Sally McManus, who said it would allow low wages to keep pace with rising costs.
The study comes as the Fair Work Commission announced a dramatic 5.2% increase in minimum wage on Wednesday and 4.6% for awarded wages.
“That means low-wage workers will have a better ability to pay rent and pay groceries and pay energy bills as well,” she said.
“It’s going to make a big difference for so many workers.”
She added: “We don’t know what will happen in the future in terms of inflation, if it is a peak that will come off quickly or if it will be something that will last. more than a year.”
But the pay rise for millions of Australians is likely to be passed on to families as businesses struggle to find cash, warned Andrew McKellar, CEO of the Australian Chamber of Commerce.
“This comes at a time when inflation is emerging as one of the most pressing challenges facing the Australian economy,” he said.
“If we have to solve this problem, if we want to remain competitive, it is clearly not a decision that will help in these circumstances.”