Shoppers at Melbourne Central. Photo: Eddie Jim
You can blame Labor for the fall in the Westpac/Melbourne Institute consumer confidence index. Well, Labor voters anyway – their consumer sentiment dropped 13 per cent this month and is down by more than 26 per cent on this time last year.
As the accompanying graph shows, pretty much all of the fall in consumer sentiment can be attributed to those who have the intention of voting for the ALP.
Coalition voters’ view of their world remains high with an index score of 114.7, up fractionally from January. Labor voters are down to 90.9 – back where they were in 2009 amidst all the fear and uncertainty of the GFC hitting.
Consumer sentiment by political affiliation. Source: Westpac / Melbourne Institute
Maybe that should be the headline: “Abbott as bad as GFC, say Labor voters”.
Given that the biggest index component falls were for the outlook for economic conditions over the next 12 months and five years (down 7.1 and 4.6 per cent respectively to two and five-year lows), it appears that Labor supporters have little faith in the government’s ability to manage the economy.
There’s particular concern about employment prospects with households earning less than $60,000 a year suffering the biggest falls in sentiment.
Curiously, the Westpac commentary on the survey continues to ignore the voting intentions impact, but chief economist Bill Evans does reach a political conclusion:
“Households seem to be sending a fairly clear message in this survey. It is around why fiscal policy is about to be tightened and interest rates lifted when the labour market is so weak and housing affordability is being squeezed.”
It is a curiosity of the survey that the present conditions reading was up even as the outlook sentiment fell, perhaps explained by a majority of respondents (57%) now thinking that interest rates will rise over the next year.
And speaking of the outlook, in an exchange on Twitter with me, @michaelpascoe01, Finance Minister Mathais Cormann (@MathiasCormann) sidestepped commenting on the Reserve Bank’s upgraded economic forecasts – the best economic news in nine months that effectively winds back much of the highly publicised deterioration in December’s MYEFO (mid-year economic and fiscal outlook).
“Next update in the Budget on 13 May 2014” says Cormann.
@MichaelPascoe01 Next update in the Budget on 13 May 2014.— Mathias Cormann (@MathiasCormann) February 12, 2014
Michael Pascoe is a BusinessDay contributing editor.