Consumers positive about present; uneasy about future

While Australians seem positive about their current situation, there have growing fears about what the future may hold.

Tumbling interest rates and the announcement of a further and substantially larger stimulus package from the government would appear to have reassured Australians for the time being, but there are rising concerns as to what lies ahead.

The Westpac-Melbourne Institute Index of Consumer Sentiment released yesterday, revealed consumer confidence fell 4.6% in the past month to 85.8 points.

The Index’s measurement of future expectations also dropped by 10.5%, registering a 3 month decline of 13.3%.

In stark contrast however, consumers feel increasingly confident about the present. The Index’s current conditions measurement rose by 3.9% in the past month and 24.7 in the past three months.

Bill Evans, Westpac chief economist, said “We have never seen, in the 35 year history of the survey such a three month divergence in the current conditions and expectations.

“While consumers recognise the improvements in current conditions resulting directly from the aggressive policy stimuluses they are unusually fearful of the future”.

Mr Evans said the bank expected a further rate cut from the RBA in March of up to 0.75 per cent, although a smaller 0.5 per cent cut was a possibility if the RBA wished to conserve capacity for a longer easing cycle.