Consumer confidence has fallen sharply in the wake of Treasurer Chris Bowen’s announcement on Friday that the Federal Budget deficit has blown from a projected $18b to over $30b in just ten weeks, according to the weekly Roy Morgan Consumer Confidence Rating.
The index fell to 112.5 (down 5.6pts in a week since July 27/28, 2013).
Roy Morgan says the drop is the result of a decrease in confidence about all components of the survey, except personal financial situations compared to this time last year.
“Consumer confidence has plunged to 112.5 after Treasurer Chris Bowen announced this year’s projected Federal Budget deficit had blown out from $18 billion to over $30 billion in only the past ten weeks. The massive Budget ‘blowout’ means the Federal Government is now not projecting a Federal Budget surplus until 2016/17,” says Roy Morgan spokesperson, Gary Morgan.
Morgan adds that the above results, along with unemployment estimates showing 10.1% of Australians are unemployed and a further 9% under-employed, provided a strong incentive for yesterday’s official interest rate cut.
“In addition, Australia’s official CPI has averaged an annual rate of only 1.3% over the last three quarters – well below the RBA’s stated inflation target of 2-3%.”
Fewer Australians (51%, down 5%) say now is a ‘good time to buy’ major household items (the lowest since September 8/9, 2012) compared to 19% (up 4%) that say now is a ‘bad time to buy’.
Now 28% (down 4%) of Australians expect ‘good times’ economically over the next twelve months compared to 32% (up 5%) that expect ‘bad times’ for the Australian economy.
Over the longer term 33% (down 2%) of Australians expect the Australian economy to have ‘good times’ over the next five years compared to 21% (up 3%) of Australians that expect ‘bad times’ for the Australian economy.
Now 39% (down 1%) of Australians expect to be ‘better off’ financially over the next 12 months while 17% (up 4%) expect their family to be ‘worse off’ financially.
However, Australians are now more confident about their personal finances compared to this time last year with 31% (up 2%) saying they are ‘better off’ financially than this time last year and 30% (up 1%) saying they are ‘worse off’ financially.