New data out of ME Bank has revealed the unexpected: the nation’s financial comfort has risen “to a near record high”.
ME’s Household Financial Comfort Report helps quantify how Australians feel about their financial situation. The most recent iteration revealed that household comfort within the country has increased to 5.76 out of 10 in the past six months to June 2020, which sits just under its historical high of 5.78 recorded in December 2014.
Furthering the surprise, comfort jumped the most among groups who often report feeling the most financial insecurity, such as casual workers, the unemployed, low income households and single parent homes.
According to ME Bank’s consulting economist, Jeff Oughton, the high degree of comfort can be attributed to both the prudent actions of households as well as the unprecedented government support over the last several months.
“Fear of COVID-19 and a very weak labour market triggered many households to increase precautionary savings, reduce spending, draw on long-term savings, such as superannuation, and delay bills or loan repayments,” he explained.
In June, 57% of households indicated they ‘spent less than they earned each month’ – the highest level of saving since the survey began nine years ago.
However, Oughton warned that the cautious behaviour and decrease in spending could set off a chain reaction which ultimately triggers a deeper recession.
“Government stimulus has bought some time and helped boost the financial resilience of Australian households for now,” he said.
“[But Aussies have] lost income, their jobs and entire livelihoods, their wafer-thin savings buffer is dwindling, and government support is the main action stopping them from falling over. Unless the economy gains momentum, tapering government support too soon could have disastrous consequences on the financial comfort of households.
“This survey shows that the financial consequences for households of this pandemic remain critical. Many eyes will be on what governments do in the final months of 2020 and into next year," he finished.