Consumer confidence “nosedived” last week as the GDP results showed the Australian economy had entered a so-called per-capita recession, ANZ analysts say.
The ANZ-Roy Morgan Australian Consumer Confidence index dipped by 4.6 per cent from the previous week, with confidence in current economic conditions falling 7.9 per cent and the “time to buy a household item” metric sliding 1.7 per cent.
“Confidence took a significant hit last week, falling well below average,” ANZ head of Australian economics David Plank said.
“We think the soft GDP report and, perhaps more importantly, the focus on a ‘per capita recession’ were the primary factors in the plunge.”
The economy grew by a seasonally adjusted 0.2 per cent in the three months to December but slipped into a so-called “per capita recession” once the effect of population growth was stripped out.
GDP per capita fell 0.2 per cent in the December quarter after a 0.1 per cent drop in the prior three months.
Mr Plank said the ANZ-Roy Morgan consumer confidence index last recorded such a big decline after the Wentworth by-election in October 2018, when the dip was temporary.
“This decline could be longer-lasting as it appears to be more related to underlying economic conditions,” Mr Plank said, adding that it could make the the central bank consider a cut in interest rates.
“If it proves to be a sustained decline, then it is yet more bad news about a household sector that is already under pressure. No doubt the RBA will take note.”