Consumer confidence; is it up or down? You’d never know from the ‘experts’. COLIN BENJAMIN
By Colin Benjamin
We realise that you and the RBA are very busy getting Australia on to a course that at the same time promotes growth and stamps down on inflation, but could you delay making precipitous changes in our business lives and give us your thoughts on the conflicting August reports from Melbourne University’s and Morgan’s Consumer Sentiment indices.
We have reached a fork in the road and are being asked to accept that Australians believe according to Westpac’s Bill Evans we have hit the bottom and we are on the way up. But according to Gary Morgan we are following the world trend down further.
Westpac states: “This is the third biggest jump in the index in the last five years, but it comes as no surprise” and “confidence about finances relative to a year ago soared by 18%, expectations about finances over the next year improved by 16.9% and confidence about the one year economic outlook improved by 14.8%”.
It has consistently presented a different result from other studies. Last month’s survey showed the Consumer Confidence Index diving below 80 points for the first time since the 1990s recession.
At the same time Gary Morgan is saying: “The RBA needs to drop interest rates now before Australia has the recession we don’t need to have – it is clear interest rates should not have been increased so much as Roy Morgan Consumer Confidence is the lowest since Australia’s last recession, “which Australia ‘had to have’ and unemployment is higher than everyone thinks”.
One index is based on phone interviews that reflect the media hype based on what brokers want us to do, while the other is based on interviews with consumers in their homes. Some of this difference may therefore come from small one-off samples rather than regular weekly reviews and different methodologies, but there is only one Australian market that is the subject of these surveys. It’s time that the media asked these surveyors to get together and provide a consistent report to those of us in the futures business.
The Roy Morgan Consumer Confidence result is mainly due to more Australians feeling negative about purchasing major household items. Now in August, 40% of Australians feel that now is a bad time to buy major household items, 48% (unchanged in a month) expecting bad times for the economy in the next 12 months and 43% of Australians felt they are worse off than this time last year, with just 25% feeling better off.
Looking to the future, only 35% expect to be better off this time next year while 25% (down 4%) of Australians expect to be worse off next year.
Smart companies that are doing the right thing by resetting their projections for the coming year in their business plans and getting closer to their customers than ever before need to take a judgement on which of these trends the RBA is considering. The Futurist tends to believe the worldwide trend – that the worst is yet to come and suggests that business needs to remain focused on the basics.
Just have a look at the different reports from analysts pushing the recovery we have to have in the United States to see that we need more and better reporting from the consumers and less reliance on a snap shot on one weekend in the month that could affect decisions by the central bankers.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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