Australian consumers might be less anxious than they were but the behavioural economics guy in me says that their actions speak volumes for enduring levels of caution. Caution which will hopefully lift with the fall in household fuel costs, an RBA rate cut and a renewed government focus in 2015.
But as this chart from the NAB Consumer Anxiety Index shows, Australian households and consumers are still reducing spending on discretionary items.
The headline to the NAB’s chart might seem a bit confusing given the obvious plans to reduce spending but Robert De lure, NAB Senior Economist – Industry Analysis, told Business Insider that what is occurring is the rate of spending reduction has gone down since the last survey.
So even though non-discretionary items dominate budgets, consumers are slowly improving their outlook by cutting back less on discretionary purchases then they were last survey.
Retailers are in for a rough period and the transition from really weak to good won’t happen overnight.
That’s where we are at the moment.