This chart from a report by HSBC economist Paul Bloxham shows the growth of household wealth in Australia, which had dropped significantly in 2011/12.
According to Bloxham’s report out this morning: “Households have been rebuilding wealth via higher saving in recent years, so consumer balance sheets have improved.”
“After a number of years of apparent cautiousness, Australia’s consumer sector may be ripe for a revival.”
Here’s what it means:
- Low rates, rising household wealth and a housing construction upturn are expected to support a pick-up in household consumption
- HSBC expects that the drag from household balance sheet consolidation and rising household saving may be behind us
- Given the low level of household consumption as a share of GDP, there may be room for it to increase
This chart shows that consumption as a share of the economy has been quite low: