EDITORIAL: Ailing economy gives Aussies little to smile about
EDITORIAL: Australians are facing some of the bleakest consumer sentiment in decades, leaving households increasingly pessimistic about what comes next.
How are you feeling about the future?
If you’re like the majority of Australians, not great. That cost-of-living squeeze we’ve been living through for years now is getting even squeezier.
It’s starting to feel like we’ll be lucky to escape without being left a smear on the underside of the economy’s boot.
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By continuing you agree to our Terms and Privacy Policy.The Westpac-Melbourne Institute’s consumer sentiment survey illustrates the depth of our collective economic despair. It shows that those who are feeling pessimistic about their lot outnumber the optimists among us by almost 20 per cent. That’s significant because historically, Aussies have been a sunny bunch. In the words of Westpac economist Matthew Hassan, they’re “typically moderately positive” in terms of how they feel about their family finances across the coming year.
Not so now.
The survey’s May result was one of the worst across its 50-year history.
The only times Aussies have been more glum about their financial prospects were: the start of COVID in 2020, the global financial crisis in 2008, the 1991 recession and the rapid rate hikes of 2022 and 2023. This time, there’s no sudden global disaster to blame for our despondence. Just a slow, seemingly inexorable march towards a tomorrow that feels bleaker than yesterday.
Instead of helping, governments are heaping on more pain.
Treasurer Jim Chalmers’ fifth Budget landed with a thud in May and a month on, we’re still feeling the aftershock. Close to 70 per cent of survey respondents said viewed the Budget as “unfavourable”.
Certainly, it gave them little to feel optimistic for, save a bone in the form of a $250 tax offset (that they won’t actually see until the 2027-2028 financial year). That measly token — which can’t be cashed for another two years — is eclipsed many times over by the effects of runaway inflation and skyrocketing petrol prices (the cut to the fuel excise will end June 30 and the Government has shown no appetite for its extension).
Then there’s the big one. According to Cotality data, house prices in Sydney and Melbourne have fallen by 0.9 per cent and 0.8 respectively since April, prior to the Budget’s release.
Good news perhaps if you’re a first-homebuyer. Not so good for existing homeowners who are watching the value of their homes fall. Potentially disastrous for recent entries into the property market — perhaps helped there by the Government’s 5 per cent deposit scheme — who are now in danger of slipping into negative equity.
A speck of good news for households on the horizon: NAB economists now believe in the face of such doom and gloom, the Reserve Bank will put a pause on interest rates for the time being.
They forecast the next movement in the cash rate will be down, though when that will occur is unclear.
That will be a relief to many. But for households struggling with increases to the cost of everything, any comfort that it brings will be short-lived.
