Tuesday, 29 May 2012

Consumer confidence – Who the heck knows

I’m sitting on a plane reading the paper and thinking ‘does anyone know what's really going on in the economy?’ I’m reading the same paper and there are conflicting stories about the economy, interest rates and the direct impact that this has on consumer confidence and spending - which ultimately drives the economy.

The first story tells of the decline in advertisements for full time jobs and that Job advertising is down over 8% on the same period last year.

In recently announced figures retail spending was up 0.9% in March; this followed an increase of 0.3% in February on the back of growth in restaurants and cafe operations. The main decrease was seen in average food prices which dropped 0.9%,  the biggest drop in 30 years driven by competition between the two big supermarket chains.

In all of the stories they talk about current month and year to date stats but we all know that consumer confidence is driven by the press and is formed over a long period of time. The GFC hit in September 2009 and we have had three years of uncertainty and this doesn't turn around in 1 month or with 1 interest rate cut.

There is no question that consumers are happy with the recent RBA decision to cut interest rates but when the banks do not pass on the Interest rate cuts - what does this say to consumers?

Page 3 Contradictions
Back to the newspaper, three pages in, another commentator says we can expect a further .75% drop in interest rates by end of 2012, the other article says the 1 month increase in retail sales of only 2% will prevent any further reductions. I don’t know about you but I find this very confusing. It’s obvious that these commentators don't know what's going on, so what hope has the business world or consumer.

It’s the business world and consumers that are driving our economy and these types of mixed messages are confusing and are perpetuating the problem with both business and consumer confidence.

Looking to the future.
I recently met with 2 large national retailers who also mentioned that it is the most unstable economic times they have seen for many years and planning for the year ahead is almost an impossible task.

What will the future hold ? Who knows? Not the government. Not business owners and certainly not the media. I say we just get on with it!

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