It’s not the scariest chart in the economy anymore, but the fact that the ANZ-Roy Morgan Weekly Consumer Confidence Index remains below the long run trend is still evidence that the economy has a way to go before it can get back to trend growth.
The good news is that this week the index rose 0.5% to 111.4. That’s the second week in a row that it’s up 0.5%.
The problem with confidence is that having been consistently above the long-run average from mid-2012 until the Budget leaks began in late April 2014, the index is now seemingly stuck below the our national average.
The government has clearly picked up on this and is promising a “no surprises” budget but the question remains: what they can do to rebuild confidence rather than just stopping further falls.
Highlighting this ANZ Chief Economist Warren Hogan said in a note accompanying the index that while sentiment towards housing has been “bolstered” by the February rate cut, consumer confidence has not responded.
“The next key tests for consumer confidence are a prospective rate cut in Q2 and the May Federal budget. The response of confidence to these two key events will be important as to how consumer spending evolves into the second half of 2015,” Hogan said.
It seems Joe Hockey needs to pull a rabbit out of his budget hat. No surprise there.