Consumer confidence crashes?

[Rockstar]

Hi All,

Just got this off ABC.


Successive interest rate increases appear to have dealt a crushing blow to consumer confidence, which has sunk to its lowest level since 1993.

The Westpac and Melbourne Institute consumer sentiment index has plunged a further 9.1 per cent this month to stand at a mere 88.6 per cent.

"That's the lowest level we've seen in confidence since September 1993," Westpac chief economist Bill Evans said.

The cumulative fall over the past three months is the largest since the index was first measured in 1975.

Besides rising interest rates, consumer confidence has been buffeted by the global credit market crisis and tumbling share markets.

Mr Evans says the collapse in sentiment signals the Reserve Bank has done enough on interest rates.

 

[BayView]

I don't expect the rates to start heading south for a while yet. Maybe the end of the year?

I expect the RBA will assess as they go, but hopefully keep the rates on hold for the next few months.

 

[MarkB]

Agree with LAA.

They'll be wanting to see evidence of downward pressure on CPI before they loosen the screws much, if at all.

M

 

[BV]

Mr Evans says the collapse in sentiment signals the Reserve Bank has done enough on interest rates.

No, they haven't done enough, we are still breathing...

 

[mitch]

lm for a couple or more rate rises , say 3 @ .25 % before the end of the year and really shake things up .

Have a huge crash , then a minny one of those things we had to have and come 2009 / 10 when the smoke clears , the world is a better place.

To many bleeding hearts and "its not my fault" around when things toughen up

 

[Mrman]

Possibly 1 more rate rise to come before the Federal budget. I think the RBA will wait to see what the outcome of that will be.

 

[sash]

Possibly 1 more rate rise to come before the Federal budget. I think the RBA will wait to see what the outcome of that will be.

Can't see another rate rise. The economy has slowed dramatically since Sept.2007. The numbers will show this in April / May stats - i.e. GDP growth, unemployment, capital expenditure, retail sales, etc.

I see rates in a holding pattern till around Aug./ Sept......then there will be noises around cutting rates......and a actually rate cut in Nov. / Dec. 2008 in time for Xmas.

People are doing it tough in most parts of Australia. Apart from some parts of Qld and Perth....it is all doom and gloom at the moment.

Good time to look for property if you are wanting good buys....and if you have a 2-3 horizon.

 

[alexlee]

Can't see another rate rise. The economy has slowed dramatically since Sept.2007. The numbers will show this in April / May stats - i.e. GDP growth, unemployment, capital expenditure, retail sales, etc.

Sash, early in the year did you 'see' the recent two rate rises?
Alex

 

[sash]

Sash, early in the year did you 'see' the recent two rate rises?
Alex

Yes...let me see??? ..... there was one in Aug 2007....one in Nov 2007..one in Feb 20 2008....one in Mar 2008. This brings it to 1% in increases just for 2007.

As I have previously stated consumer confidence has tanked! I even did an informal survey around Western Sydney but talking to RE agents and the locals there. Not good at the moment.....

I think happy days are still about 12 months away.

Can't wait for the May 2008 inflation figures.....even you maybe surprised....

 

[alexlee]

You haven't answered my question, Sash. Did you expect the recent RBA rate rises? Or did you think, last year, that the RBA wouldn't raise anymore? If you didn't expect them, what makes you think your predictions are better now?
Alex

 

[Ausprop]

Yes...let me see??? ..... there was one in Aug 2007....one in Nov 2007..one in Feb 20 2008....one in Mar 2008. This brings it to 1% in increases just for 2007.

As I have previously stated consumer confidence has tanked! I even did an informal survey around Western Sydney but talking to RE agents and the locals there. Not good at the moment.....

I think happy days are still about 12 months away.

Can't wait for the May 2008 inflation figures.....even you maybe surprised....

my problem with this logic is that confidence can crash all it likes but it wont stop fuel, food and rent etc. from rising significantly in the year ahead. yet the RBAs automatic response is to keep beating until the dreaded inflation goes away. it won't, but they need to keep beating. I am wondering how long the AUD will stay at where it is, because if you drive a V8 landcruiser I would be very worried when the insulation on the price of petrol (in the form of a high AUD) starts to peel away. Without knowing the ins and outs of it, an AUD if 70c would put petrol at about $2 a litre? when caltex recently warned of $3 a litre and i went on to read that it was within 10 years, I actually thought that would be a bit of a bargain. my resi IPs are garuanteed to double every 7 years which is better than petrol pricing

 

[sash]

You haven't answered my question, Sash. Did you expect the recent RBA rate rises? Or did you think, last year, that the RBA wouldn't raise anymore? If you didn't expect them, what makes you think your predictions are better now?
Alex

Alex in Nov. I said that there would be 2-3 rates rises.

The in Feb. I said there would be another 1-2 increases in Feb. 2007....so still I am consistent. One has come through in Mar....but am doubtful of next one.

Now it would seem there is less likely to be another increase. However, there banks may increase independently of the rate rise. So far they have put up rates another 25-35 basis points...this has further slowed the economy.

I am basing my strategies on this. I tend to forecast based on the information on hand.....but you are right if I had a crystal ball...I would be far richer.

On hunch....I think I am on the mark so far. I also foresee that interest rates maybe headed down late this year....there are some news articles already on this. Time will tell....... Also, I am watching the fixed rates....already some of them have steadied and next move might be down....

 

[Kennethkohsg]

Dear All,

1. It seems that the Australian consumers and businesses are starting to pay some serious attention to the RBA's recent successive 2x0.5% pa. interest rate in Feb and March 2008 period.

2. In Kevin Rudd's mind, this will be good for the Australian Economy in the short term as local domestic inflation figures are likely to slow further in the coming months as the Australian Economy is believed to be fundamentally sound and strong and still growing vigorously and robustly, at this point in time.

3. As the Australian Economy starts to slow down in the immediate short term, will further adverse global situation cause the Australian Economy to "tank" into a Recession in the medium term?

4. Alternatively, will more anti-inflation measures to be used, such as further interest rate increase by the RBA as well as further slowing of the Australian Economy likely to cause it to slip into a Recession in the near future?

5. Which of these 2 options, do you prefer the Australian Government to be doing for its Economy?;- To slow down the growing Australian Economy to achieve the targetted 2%-3% annual inflation growth and risks the Australian Economy slipping into a Recession subsequently vis-a-vis allowing the Australian Economy to grow as before, with the annual inflation kept at 3%-3.5%/4% pa level?

6. Which of these 2 scenarios would you be personally more comfortable for the Australian Economy to perform in the long run, please?

7. For your further comments and discussion, please.

8. Thank you


Cheers,
Kenneth KOH

 

[knightm]

my resi IPs are garuanteed to double every 7 years

Ausprop - who provided the guarantee? Where can I get one?

 

[Ausprop]

Ausprop - who provided the guarantee? Where can I get one?

dunno... everyone talks about it here like it's as safe as a government backed bond! isn't that why it's ok to hold loss making properties? go to an investors club meeting... I understand they'll give you one!

glad someone picked it up... to get away with a comment like that is almost scary

 

[steveadl]

1. It seems that the Australian consumers and businesses are starting to pay some serious attention to the RBA's recent successive 2x0.5% pa. interest rate in Feb and March 2008 period.

Try 2 x .25% rises. 2 x .5% and the masses would be huddling..... well, on mass!