The new report, commissioned by ad firm Grey Australia and conducted by Sweeney Research, has found despite rising wages and employment, consumers are set to reduce their spending for discretionary retailing including entertainment, fast food and electronics.
CommSec economist Craig James says the results indicate that "in the back of people's minds, the global financial crisis isn't really over."
"It really gets down to how people respond to a shock. The global financial crisis was a big shock for a lot of people, and confidence returns but we can't put a precise figure on it," he says.
Grey Australia managing director Paul Gardner says the result is what they are calling the symptom of "silent fear". Australians says they are doing relatively well, but aren't showing it in their spending.
"The difference from last year is that consumers were quietly optimistic. We saw that last year, people were looking on the brighter side of life despite economic circumstances to the contrary."
The report shows 45% of consumers expected to spend more on general household expenses, followed by 29% expecting to spend more on housing costs, 22% on health and medical expenses and 21% on transport costs.
The savings rate is also at a 20-year high of 10%.
The biggest declines in spending are in home entertainment, with 24% expecting to cut back, followed by 23% on dining and fast food, 22% on special events, 15% on personal care and furniture, followed by 14% on entertainment, sports and leisure.
The report also shows consumer confidence overall is dropping. While in January, 46% said they were at least very satisfied with their lives, and only 25% of respondents were concerned about the economic outlook, now those figures are at 44% and 31%.
The Eye on Australia 2009 report also found that 1% said cost of utilities would be concerning, but now that figure is 13%.
Housing affordability is also a huge issue, with 45% listing it as their worry that keeps them awake. This was followed by 40% saying "having enough money to retire", 36% saying personal finances, 35% on immigration and 34% concerned with rising crime.
And 27% say their household financial situation is going to get worse, up from 22% in January last year. Nearly 80% of people are now choosing to buy products when on sale.
Gardner says this, in theory, shouldn't be occurring.
"So now we're looking at low inflation, reasonably low interest rates. Combine that with the fact we basically missed the GFC altogether, China is buying everything we're selling them, housing prices have been reasonably steady."
James agrees, saying consumers should by all rights be satisfied with Australia's current economic standing.
"I would have thought most economists predicted the fundamentals would rebound by now, because incomes are rising, wages are up, wealth is at record highs, and so in theory there shouldn't be any great problem."
But Gardner says there are external factors affecting consumer confidence, including the rising cost of utilities.
"People are recalling the days when politicians said privatising the industry would be a good thing for costs – that hasn't happened. And that affects shopping behaviour."
There have been numerous reports of utilities increasing rates over the past year or so, and Gardner says this will critically affect household finances when they increase every quarter.
He also points to home affordability, as rising costs will reduce the ability for consumers to save for a deposit – but he also thinks there is an opportunity here for businesses to step up and inspire shoppers.
"There is this cry out for political leadership, but not only that, brand leadership. You look at billionaires in the United States like Bill Gates and Warren Buffet going out and curing malaria, and here you have Gerry Harvey trying to get a 10% tax added to everything online."
"Australians feel very vulnerable and are anxiously looking for ways out in all of this, and they desperately want leadership."
Unfortunately, however, there seems to be no indication of when consumer confidence will return. James says there isn't a start-date for recovery, and it will be gradual – especially as the United States is still recovering.
"Nobody else rings a bell and says, "now it's over". That's the issue with something like this, because you still have the US economy struggling and interest rates are at emergency low levels."
"In our minds here, we've still focused on places like Europe and the United States, despite most of our fortunes being controlled in the Asia region. As long as wages and employment keep rising, things will recover."
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