There’s some good economic news this morning with the fall in petrol prices finally lifting the ANZ/Roy Morgan Consumer Confidence index back to its long-run average.
The ANZ this morning reported that, “confidence rose 1.4% to 113.6 in the week ending 18 January 2015. This follows a cumulative rise of 1.6% over the previous two surveys.”
They warn that January is usually a more buoyant time for consumers and add there is some disappointment that, “Lower petrol prices haven’t delivered as big of a bounce to confidence as we would have expected.”
That’s certainly the case when compared to consumer confidence in the US which rose to 10-year highs last month.
ANZ Chief Economist Warren Hogan notes the important question for growth now is whether households spend or save the extra cash from petrol prices. He noted that, “there may be a longer lag before lower petrol prices start to boost Australian consumer confidence, thus far the response from both confidence and retail anecdotes suggest that households remain cautious.”
My hypothesis would be that this disconnect is easily explained by points 1, 7 and 8 of Soc Gen’s theory on why lower oil, rates and currency depreciations haven’t gained traction in the global economy.