Please select your home edition
Edition
Helm Events 728x90

GFC hangover still impacting on consumer confidence

by Media Services on 7 May 2011
Consumer sentiment slow to pick up. MIAA
Consumer caution, led by born again budget-conscious and debt-fearful women, will hinder the Australian economic recovery, according to Commonwealth Bank of Australia chief economist Michael Blythe.

Speaking at the Australian Institute of Company Directors (AICD) business breakfast in Brisbane last week, Blythe was explaining the economic backdrop framing the economy.

In the lead up to the Federal Budget announcement slated for next Tuesday (May 10), Blythe described the economic backdrop as quite good and says it will remain good for the next couple of years, although there are some risks involved.

'From our research, when you turn to domestic risks, a big one is the consumer who is far more interested in savings and paying off debt than spending, so this cautious consumer and how that evolves will have an effect on the economy,' he said.

'It’s not so much consumer caution, it’s retail caution that we should be thinking about - one third of consumer spending is in the retail sector, so the retail sector is currently in pain. We also found that women dominate decisions in the retail sector of spending and men tend to dominate the spending decision in the non-retail areas of the economy.

'What stands out about this is that our female client base is much less optimistic about the outlook than our male client base, so the less optimistic the group that controls retail spending is the weaker that sector will be. To change those perceptions, there needs to be a strong labour market.'

Blythe says consumers should prepare for an environment where interest rates will increase over the next year due to two key factors.

'There are two indications that interest rates need to go up – there are inflationary reasons and with the mining boom, another sector has to step back and make room and the only sector big enough to do that is the household sector. Putting up interest rates has always been an effective way of putting a lid on household activity.

'When commodity prices rise, it tends to boost the nominal GDP rate. Real GDP over the next few years will grow by t3 to 3.5 per cent. At the same time, we think nominal GDP will grow by 7 or 8 per cent per (annually) and that’s an above average outcome.

'The mining boom mark two won’t deliver the same roads of gold that the mining boom mark one delivered, we’ve compared key indicators like profits, growth in capital spend and taxes paid by the mining sector.'

When the budget is released next week, Blythe said the economy is likely go into savings mode to counter its deficit.
'The various natural disasters will add to deficits and a flood levy will start later this year so we’re off track to getting back to a surplus in a few years time,' he explained.

'At this stage, it looks like a lot of savings measures will be pushed through, like means testing of the health insurance rebate, which will most certainly go through this time round and changes to middle class welfare payments.
'In terms of new spending, I think it will go towards mental health initiatives, education and training, incentives to encourage people from welfare back into the workforce and incentives for infrastructure related spending.'
Ancasta Ker 40+ 660x82Barz Optics - Melanin LensesSouthern Spars - 100

Related Articles

Mark Light appointed Race Director of Clipper Round the World Race
Mark replaces former Race Director Justin Taylor who decided to stand down after almost a decade with the company. With four years’ experience assisting the race planning, he is now looking forward to stepping up to the lead role, one of the most challenging that exists in global sailing.
Posted on 28 Nov
Predictwind release improved racing and cruising routing function
PredictWind has released a major upgrade to its Routing function, taking a much more graphic and interactive approach PredictWind has released a major upgrade to its Routing function, taking a much more graphic and interactive approach to what has been a black art of weather routing, used to chose the fastest route for racers or most comfortable route for cruisers.
Posted on 28 Nov
Only room for one at the top
The results of RMIT's (Royal Melbourne Institute of Technology) independent testing are in. The results of RMIT's (Royal Melbourne Institute of Technology) independent testing are in. Zhik® is the market leader in waterproof durability with a new standard that replicates the real world sailing environment and conditions. It is an astounding four times more so than the previous leader.
Posted on 28 Nov
Marine Resources job updates
The latest jobs in the marine industry Marine Resources specialises in filling job vacancies within the Leisure Marine Industry. We have a variety of recruitment services to suit all types of marine employer.
Posted on 18 Nov
Zhik Avlare wins 2016 METS DAME Award
Do you know a child or perhaps a dog or a cat that absolutely hates having a bath? Do you know a child or perhaps a dog or a cat that absolutely hates having a bath? Well here are a range of Men’s and Women’s tops that are so hydrophobic the only adjective that describes them is hate.
Posted on 17 Nov
Southern Spars at METS Trade Show, Amsterdam
Southern Spars is attending the METS Trade Show in Amsterdam, the Netherlands again this year. Southern Spars is attending the METS Trade Show in Amsterdam, the Netherlands again this year. On the stand this year we will have founder and director of sales, Mark Hauser, senior designer Steve Wilson, sales managers Dean Harper and Paul MacDonald, general manager Peter Batcheler and other sales and technical staff.
Posted on 14 Nov
Watersports ARFA Goggle from Barz Optics
When on the water and you're in the waves, then sometimes sunglasses alone just don't cut it. When on the water and you're in the waves, then sometimes sunglasses alone just don't cut it. This is where the Arfa sunglass / goggle comes into play - originally developed for surfing, but applicable for a number of watersports including sailing, windsurfing and jet-skiing.
Posted on 10 Nov
Olympian Bora Gulari joins Quantum Racing as helmsman for 2017
With owner-driver Doug steering the boat in Key West, Gulari will serve as strategist and begin training with the team. In January, when Quantum Racing toes up to the starting line at Quantum Key West Race Week, the crew will include Bora Gulari who is joining the team for the 2017 52 Super Series. With owner-driver Doug Devos steering the boat in Key West, Gulari will serve as strategist and begin his training with the team.
Posted on 10 Nov
World Sailing - GAC Pindar sign long term partnership with world body
GAC Pindar have confirmed that they have entered in to partnership with World Sailing. GAC Pindar have signed a memorandum of understanding for a long-term partnership with the international governing body and the anticipated relationship will see GAC Pindar become an Official Partner of World Sailing. The relationship will last until 31 December 2020, with GAC Pindar granted exclusivity in the marine logistics and shipping sector.
Posted on 10 Nov
SAP Sailing Analytics helping Extreme Sailing Series push rim of sport
The Extreme Sailing Series™ isn't just at the forefront of its sport; it is also a leader in developing new technologies The Extreme Sailing Series™ isn't just at the forefront of its sport; it is also a leader in developing new technologies and pushing the boundaries of what's possible on the water.
Posted on 10 Nov