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What in the hell are Aussie consumers afraid of?

Peter Switzer
13 April 2016

By Peter Switzer

With our stock market bound to be up again today after a great 79 point gain yesterday and Wall Street strongly positive overnight, Malcolm Turnbull received some annoyingly bad news yesterday, with consumer confidence taking a plunge to a seven-month low, with pessimists outnumbering optimists! As Rove used to ponder: “What the #*!?” and even more insightful, as Franklin D. Roosevelt assured us: “The only thing to fear is fear itself!”

In case you missed it (you probably didn’t because media outlets always lead with bad news), the Westpac consumer sentiment reading fell 4% to 95.1. This is the second month in a row with this happiness index under 100, which is not good news for the economy and the PM.

This really puts pressure on Treasurer Scott Morrison with his Budget, which better not spook consumers more or we might be looking at a new Prime Minister Bill Shorten on July 2.

Today the pressure continues, with the acting PM, Barnaby Joyce, having to wait for the latest employment and unemployment numbers out this morning. If they’re shockers (I don’t expect them to be so) his public reaction to the media might be noteworthy, as much of Barnaby’s off-the-cuff comments are.

By the way, in case you missed this (you possibly did because the media tends to ignore good news), business conditions came in at an eight-year high on Tuesday and business confidence spiked from a good 3.4 to a strong 6.1. So business is comfortable with the economy and the PM but not the consumer. Okay, let’s try to work out why the consumer might be negative. Try these bananas:

  • The banks have taken it on themselves to do out-of-cycle interest rate rises. 
  • On APRA’s and the Government’s encouragement, investors buying property were hit with higher interest rates and rationed loans.
  • The stock market has had a shocker of a start to the year.
  • A Pommie economist warned of a housing collapse that would cripple our banks and the media went along for the ride.
  • Short sellers have been short selling our banks and trashing their balance sheets and yes, the media has gone along for the ride.
  • Super fund returns have fallen, partly because of bank share prices and Bill Shorten wants a Royal Commission into banks and the media went along for the ride.
  • House prices are slowing and the media loves to tell us that a price crunch for Sydney and Melbourne is just around the corner and yep, the media loves that ride.
  • Arrium, Dick Smith and Slater & Gordon have failed recently, with actual or pending job losses and didn’t that get media exposure with Bloomberg quoting ‘experts’, who said our banks will face a conga queue of failed businesses and bad debts.
  • And on top of all this, the great grey hope, Malcolm Turnbull, has been performing like a prize fighter with rubbery legs. Apart from talking about good stuff on innovation that the normal consumer can only guess what it means (you have to hope it’s not: “What? That robot will do my job?), he and his team have come up with a GST increase and states to charge taxes!

The latest is we have to live within our means. As I asked a couple of weeks ago and have to ask again: “Who’s giving Malcolm advice?”

I hope the employment number is great, so I can conclude that Aussie consumers are over-influenced by an excessively-negative media in a 24/7 news service world. And so they’re missing the more rosy reality, which is a lot better than what Westpac’s consumer survey found.

Even yesterday we learned that total new loans rose 3.5% in February, which isn’t bad for spooked consumers. Even though dwelling starts fell in the December quarter by 5.1%, work started on a record 220,845 new dwellings over the year to December, well above the decade average of 164,317.

Also, China came out with much better than expected exports and imports, which is making the China bears/doomsday merchants, who drove the stock market down in January, look like chumps.

The May Budget better grab Australian consumers and shake them into inspired positivity or else that great business confidence reading of late could evaporate before the upcoming election.

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