Aussie consumer confidence falls to pre-GFC levels, 1/3 of Aussies think we’re in recession

Consumer confidence in Australia has fallen to its lowest point since the global financial crisis, according to a Nielsen study.

The global study saw confidence in Australia fall further than in any country except for Poland in the first quarter of 2012.

And more than a third (36%) of Australians think the country is in recession.

The biggest worries Aussie consumers have are rising utility bills and job security.

Chris Percy, MD of Nielsen Pacific, said in a statement:

Australian consumer sentiment has dropped back to levels seen in the first half of 2009 when the GFC hit households hard. The brief spike in confidence witnessed in the previous quarter was mainly due to the two consecutive interest rate cuts in November and December.

With economists predicting further rate cuts at the start of 2012, consumers were disappointed when these failed to materialise. To make matters even worse, the major banks raised their home loan interest rates putting further pressure on households.

The Reserve Bank of Australia’s rationale for keeping rates on hold is to counteract the booming resources sector. While these rates may be appropriate for the mining industry, they are not suitable for the rest of the country’s economy, particularly the retail sector which continues to struggle, fuelling the notion of a polarised, two-speed economy.

The survey ran between February 10 and 27, polling 31,000 online consumers in 56 countries.

Percy added:

Australians’ growing concerns over the nation’s economy, coupled with the high dollar and rising unemployment, continue to influence consumer behaviour and soften sentiment — only a third of Australians (34%) believe that the job market is in a favourable condition. Contrast this to the previous quarter, where nearly half (47%) thought that job prospects were good.

It’s a similar story with consumers’ personal finances as they opt to save what cash they have instead of spending on discretionary items.

Additionally, recent political instability arising from Kevin Rudd’s Labor leadership challenge further impacted business and consumer confidence. In such a challenging economic and political environment, it’s no wonder that consumer sentiment has dropped back to early 2009 levels.


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