It seems Australians like what they hear about Tuesday night’s budget, which could drive household spending in coming months.
The weekly ANZ-Roy Morgan consumer confidence index has risen to its highest level since late June, and is now more than 10 per cent above a recent trough in August.
“Continued improvement in the local news around the pandemic and talk of early tax cuts and other fiscal measures in the budget led to a gain in consumer confidence for the fifth straight week,” ANZ economist David Plank said.
However, with the index still below 100 at 95.7 points, there remain more pessimists than optimists.
Mr Plank expects detail of the budget will heavily influence the direction of the index when people are surveyed again next weekend.
Treasurer Josh Frydenberg offered some reassuring words during his traditional pre-budget appearance before the media in Parliament House.
“This budget is our plan for Australia’s economic recovery,” he said.
“We are already seeing encouraging signs across the economy as people get back to work, as the virus is suppressed, as restrictions are eased.”
The expectation of a whopping budget deficit of as much as s $240 billion in this financial year doesn’t appear to have concerned consumers.
Pre-budget announcements and hints have been coming thick and fast in recent weeks, with promised spending for small business, infrastructure, energy, the digital economy, apprenticeships, tourism and the regions.
Legislated tax cuts will also be brought forward.
Just hours before the budget release, the Reserve Bank will hold its monthly board meeting, in what some economists have dubbed Super Tuesday.
While the central bank will probably leave the cash rate at a record low 0.25 per cent, there has been speculation of a further reduction to 0.10 per cent, along with some similar tweaking to its bond-buying and bank-lending programs.
Economists think if the Reserve Bank does sit pat this month, it will move in November, leaving time to digest the treasurer’s multi-billion dollar cash splash to lift the economy out of recession.
Other monthly figures due on Tuesday are the ANZ’s job advertisement series and international trade figures for August.