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David Plank, head of Australian economics at ANZ, points out that a remarkable shift appeared in the ANZ-Roy Morgan Australian Consumer Confidence weekly survey for the weekend of 23-24 August.

Key Quotes

“The question of respondents’ view of their current financial situation compared to a year ago showed the highest confidence since the weekly survey began in late 2008.”

“In contrast, respondents were pessimistic about the outlook for the economy over the coming year. The gap between current financial situation and economic outlook is now unusually wide.”

“This divergence raises two important questions:

  • Which sentiment measure is more important?
  • How is the gap between the two typically closed?”

“Our analysis indicates that the economic conditions outlook has a slightly higher correlation with household consumption than sentiment about current finances, but both matter. We also found that the negative economic  outlook will not drag down household sentiment about personal finances, unless the labour market deteriorates sharply.”