Consumer confidence plunges

Confidence fell by a massive 27.8% last week. This fall has bought the

headline index to just above the all-time lows recorded in 1990. Confidence is

17% below the lowest point seen during the global financial crisis (Oct 2008).

All the sub-components of the survey were plunged. ‘Current financial

conditions’ fell 23.9% while ‘future financial conditions’ dropped 25.8%.

The economic conditions subindices were also down sharply, with ‘current

economic conditions’ falling 37.1% and ‘future economic conditions’ declining

by 19.1%.

‘Time to buy a major household item’ fell the most, dropping by 37.2%. The

four-week moving average for ‘inflation expectations’ was stable at 4.0%.

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ANZ Head of Australian Economics, David Plank, commented:

The increasingly negative news about the impact of the coronavirus pandemic in

Australia has had a dramatic impact on consumer sentiment, with confidence

showing its biggest ever fall since the survey moved to a weekly basis in 2008.

Consumer confidence has been lower than this level, but only just and only during

the 1990-91 recession. The plunge was broad-based, with all sub-components of

sentiment well below average and well below the levels seen during the GFC.

Only the levels seen during the 1990-91 recession are comparable. We should note

that the coronavirus has necessitated a change in the survey methodology, away

from face-to-face to phone and online interviews.

It is possible that this impacted the results, though the consistency of the responses suggests this is unlikely.

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