Consumer confidence at lowest since 2008 global financial crisis: Westpac survey

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Confidence is low in all parts of the country, says Westpac.

Ricky Wilson / Stuff

Confidence is low in all parts of the country, says Westpac.

Consumer confidence continues to slide and is now at its lowest level since the 2008 global financial crisis, as rising interest rates and the cost of living begin to bite, Westpac says.

The Westpac McDermott Miller Consumer Confidence Index fell 7 points in the March quarter to 92. An index below 100 indicates that pessimists outnumber optimists.

Westpac’s acting chief economist, Michael Gordon, said New Zealand was “rocked by a series of powerful economic headwinds”.

Many households have reported that their financial situation has deteriorated over the past year, and a growing number expect their finances to be under pressure in the coming months, he said.

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One of the main concerns for households has been the rapid rise in household goods prices, which has far exceeded wage growth, he said.

“In particular, increases in food and fuel prices have taken a large chunk out of household wallets, compressing spending in other areas,” Gordon said.

Westpac economist Satish Ranchhod said inflation hit a three-decade high of 5.9% in the year to December, but wages rose just 3, 8% on average.

“This means that many households will have seen the purchasing power of their wages decline in recent months,” Ranchhod said.

Households have become increasingly apprehensive about making major purchases and the number of households who think now is a good time to buy a major household item has now fallen to its lowest level in 14 years, did he declare.

Gordon said rising borrowing costs had also weighed on household disposable incomes and the spread of Omicron would also worry some.

“Confidence is low in all parts of the country and households are worried about the outlook for the year ahead.”

With many people choosing not to go out, hospitality spending had been a drag in areas like Queenstown and Nelson, as well as major centers like Auckland and Wellington.

The survey was conducted from March 1 to March 17, with a sample of 1,559 people.

McDermott Miller’s director of market research, Imogen Rendall, said confidence among 18-29 year olds fell below 100 for the first time since the pandemic began, with “a sharp drop” in 15.2 points to 91.9.

Current economic pressures have made home buying much more difficult for young people, she said.

Confidence among 30-49 year olds was unchanged from last quarter at 103.2.

People aged 50 and over have fallen over the past year and this quarter fell 11.7 points, to 82.8.

A greater proportion of people in this age group say they are worse off than they were a year ago, and a considerable number expect to be worse off this time next year, she said. declared.

“For those on fixed incomes, that prospect must be daunting.”

Men’s confidence was little changed from last quarter at 99.9, while women were considerably more pessimistic about their financial situation, as well as the economy, with confidence down 14.7 points to 84.7.

“Women are likely to feel the strain on household finances with rising prices and the threat of more to come as the repercussions of sanctions against Russia continue to reverberate around the world,” Rendall said.

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