The most interesting angle in the latest Westpac/Melbourne Institute consumer confidence index isn't the five-point lift to put it back in positive territory and at a 19-month high, but who did the lifting: Coalition voters.
Westpac chief economist Bill Evans attributed the improved confidence reading to the Reserve Bank's interest rate cuts gaining traction with households. Funny thing is, only Coalition voters seem to feel that way.
As the folowing chart shows, Labor voters' consumer sentiment has fallen for the past three surveys to be a little below its average of the past two years. Coalition voters' sentiment has risen strongly over the past three months to be at that 19-month high. October's cash rate trimming was the only rate cut since June.
Maybe there's another reason for the lift: the Tony Abbott effect is wearing off – Coalition voters aren't running as scared since life as we know it failed to come to an end on July 1. It's purely the Coalition voters' swing that has made the difference to the overall survey. Their confidence reading hit an amazing low of 79 in July – the month the carbon tax started - but had climbed to 86.6 in October and added another 11.4 to reach 96.5 this month, not far off the 100 break-even point between pessimism and optimism.
Over the same period, Labor voters' consumer sentiment has gone from a heady 124 in July to 116.5 in October, remaining as good as steady at 116.2 this month. The voting intentions breakdown was the only measure in the survey that showed a marked divergence – city and rural folk, men and women, all become more optimistic from October to November, as did tenants, mortgagers and those owning their homes outright. (The tenants had the best of the housing groupings, sentiment up 10 points to 115, mortgage payers up 3 to 102 and the wholly-owners ahead 6 at 103.)
By age group, the 18 to 24-year-olds must have been feeling spring, their sentiment jumping 17 points to a whopping 135, while the 25 to 44-year-olds improved by 8 to 107 and the over-45s were flat on 96. Well, you've seen that many springs, you've seen them all… Which leaves the difference between political tribes the standout issue.
It strikes me as hard to argue that only Coalition voters have been moved by October's RBA rate cut, but Labor voters are immune to monetary policy. On the other hand, this change in Coalition voters' sentiment coincides with political polls indicating Tony Abbott has been sliding, that the electorate is growing weary of the scare campaigns, of the endless visits to factories to tell workers they are all going to lose their jobs and that the Australian economy is in dire straits when it remains about the best-performed in the developed world, albeit with an outlook this year that's a bit softer than 2011-12.
If that scare campaign is wearing thin after the sky failed to fall, it's no wonder Coalition voters – the people who would have been most likely to take Abbott seriously - are feeling less pessimistic.
Michael Pascoe is a BusinessDay contributing editor.