Description

The weakness in household consumption growth from the start of 2023 was predicted by our tracking survey of the proportion of adults who have money left over after meeting commitments.  This proportion suffered a major decline from October 2022.

This measure slumped to its lowest level ever recorded since tracking began in 2003.  There was another slump in early 2024.

Promisingly, this measure lifted in August 2024 (the survey was conducted over the last two days of August) and the downward trend seems to be turning up.

This improvement appears to be due to the stage 3 tax cuts, electricity rebates, and possibly lower price inflation generally.

Adverse events could potentially reverse this.  These events include an acceleration of price inflation, a rise in interest rates, a fall in residential property prices, a large rise in unemployment, and a Donald Trump win in the US Presidential election.

Most of these are now looking unlikely: even a Trump victory seems less likely since Joe Biden exited the contest.