Thursday, June 14, 2012

It's the carbon tax wot done it - we're gloomy no matter what

Me on ABC Nightlife. June 13, 2012

9 minutes, play or RIGHT CLICK to download mp3

Ask families if their finances have improved over the past year and they are likely to feel perky. Australians gave more positive answers to that question this month than last, and more positive answers than they did a year ago.

Ask about the economy and their answers are little changed over recent months.

But ask about family finances over the coming year and the answers are so overwhelmingly negative you need to go right back to 1990 to find feelings so bad.

Just 18.5 per cent of those surveyed in this month’s Westpac Melbourne Institute consumer survey expect their finances to improve in the year ahead.A much bigger 32.2 per cent expect them to get worse.

The gap - 13.7 percentage points - is the widest since the eve of Australia’s last recession in November 1990, more than twenty years ago.

“This is strikingly negative,” says Westpac economist Matthew Hassan. “To be more negative about future family finances now than during the global financial crisis is quite surprising.”

Mr Hassan thinks anxiety about the carbon tax is part of the explanation and points to special questions asked about perceptions of news. A relatively high proportion of of those surveyed reported hearing news about tax. The proportion who found the news positive was dwarfed by the proportion who found it negative...

Perceptions of international economic news were even worse. Almost everyone who reported hearing news from overseas found it negative.

Treasurer Wayne Swan will tell a Euromoney bond forum in Sydney this morning the most immediate source of uncertainty is the outcome of the Greek elections in three days time.

He will say there is no escaping the conclusion that Europe has a long and painful road ahead, with the most likely scenario rolling crises and volatility.

With the global outlook uncertain and markets punishing nations without a credible fiscal plan, it is “critical” Australia maintains budget discipline.

The overall Westpac consumer confidence failed to bounce after the Reserve Bank interest rate cut delivered at the start of this month, climbing a barely-measurable 0.4 per cent to be down 5.6 per cent over the year.

Views about whether now is a good time to spend improved. Australians were 6 per cent more likely to feel it was a good time to buy a car as in March and 2 per cent likely to believe it was a good time to buy a house.

In today's Canberra Times, Sydney Morning Herald and Age

Related Posts

. Carbon tax angst. It's worrying the Reserve Bank

. Governor Stevens: We need more confidence

. The carbon tax will cost how much?



The Lorax said...

We are gloomy because most of us live and work in the slow lane of the two speed economy, including your good self Peter. I suspect we're also heartily sick of hearing Gillard, Swan, Stevens et al telling us our great we have it because our real world experience is very different.

Anonymous said...

It's easy to focus on rising prices, especially when you think something is going to rise in price but you don't know by how much. Over the last couple of years I have been enjoying substantial drops in prices on a lot of consumer goods. That has been offset by rising prices in electricity and water, which have nothing directly to do with the carbon tax. I also received an insurance renewal notice with a substantial increase. Over the last 5 years my home and contents insurance has nearly doubled, without any real change in risk. My house is not in a flood prone area, near the coast or in a bush fire area.

ratee said...

I work in the "fast lane" in the resources sector in WA. My peers are all in the 150k to 550k range and they are gloomy about the future. Not about paying living bills but the future growth of all their enormous investments, super, many investment properties etc.
They pop overseas for a couple of week holiday. Drive BMW M class or Merc or Lexus, they are neither stupid nor completely ignorant of economics.

I think its a perception that the 15 years of near permanent growth was really just a temporary boom not the "end of cycles" and they have adjust to plan more carefully for their future.
I'm an economist (always cautions) - none of my peers are - the end of the days of easy optimism are over and it's slowly sinking in. It makes them feel like they are loosing - but it's all easy "safe" future gains they think they are loosing. And that's a loss.

The Lorax said...

if you are gloomy on 550k with guaranteed job security, imagine how gloomy you are on 80k with layoffs happening all around you.

Pete might know a thing or two about that feeling. Perhaps we should nationalise Fairfax and save it from a fate worse than death (Gina).

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