- Australian spending has contracted by 20% on last year’s levels, according to the latest spending data from the Commonwealth Bank.
- It’s seen alcohol spending plummet, after a surge in demand in March, along with spending on clothing, recreation, personal care and transport.
- The data comes on the same day that Westpac’s consumer confidence survey showed the largest monthly fall on record, with one in five responding they had lost their entire income in March.
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You know things are dire when Australians aren’t even buying grog.
Alcohol has joined a long list of casualties as the country pulls its purse strings tight in anticipation of a recession we haven’t seen since the Great Depression, the better part of a century ago.
While Australia had been rushing to buy booze during March as lockdown measures began to take hold, the itch has begun to fade according to the Commonwealth Bank’s analysis of card transactions.
“Spending on alcohol had been holding up because of the spike in sales at bottle shops. But alcohol spend has since rolled over as the unprecedented drop in spending at hotels, pubs and bars far outweighs the lift in sales at bottle shops,” CBA head of Australian economics Gareth Aird said in a note issued to Business Insider Australia.
It isn’t just alcohol, though – spending on pretty much everything plunged leading up to the Easter long weekend as Australians are forced to stay home thanks to government restrictions.
“In the week to 10 April, total credit and debit card spend was down by 20% on year-ago levels. Spending on goods, which had previously been sitting at above-average levels, has eased to sit just 3% higher over the year. Meanwhile, spending on services has continued to plummet and is now down by 44% over the year,” Aird said.
Of course, stay-at-home orders are only part of the puzzle. Consumer confidence in the economy suffered its worst monthly fall on record, dropping 31% according to Westpac’s consumer survey released on Wednesday.
“This is the single biggest monthly decline in the 47-year history of the survey, taking the Index beyond GFC lows to levels only seen during the deep recessions of the early 1990s and early 1980s,” Westpac chief economist Bill Evans said.
“The details of the survey … are all very disturbing and reflect the large shocks to jobs and spending. However the most surprising message is the collapse in confidence in the housing market,” he said, noting that had declined to GFC levels.
Meanwhile, the labour market made for the most “sobering” reading with 7% of respondents indicating they had lost their job in March, and 14% that they had been stood down without pay.
“This survey result implies that over one in five workers have lost their entire wage income,” Evans said.
It’s no surprise then that purse strings are pulled tight. Across the board, Australians are spending 58% less on clothing, 44% less on transport, 61% on personal care and 37% less but some state economies are being hit harder than others.
“The biggest annual declines in credit and debit card spending are in Victoria and New South Wales. Our two largest states have more exposure to the most heavily impacted services sectors and less exposure to the more insulated sectors [like] agriculture [and] mining,” Aird said. “In addition, they are more impacted by the abrupt temporary halt in net overseas migration.”
Despite the federal government spending hundreds of billions to safeguard jobs, businesses and the housing market, Australians are clearly still feeling vulnerable.
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