For some time now NAB Economics has been refining the ability to capture the personal “cashflow” of consumer accounts (i.e. money earnt, or cash inflows, as well as money spent, or cash outflows), to determine if an individual has a positive or negative net cashflow. This note updates our analysis for the September quarter, but also takes a closer look at how consumers who withdrew their superannuation funds early have used their retirement funds. This has implications for how tax cuts might be spent going forward, as well as the phased withdrawal of Government benefits and resumption of interest payments over the next four months.

As noted previously, the analysis does not cover a customer’s net assets but simply flows into and out of individual accounts. Our focus is to better understand stresses in household balance sheets and hence macroeconomic impacts on consumers spending behaviours. Thus, for example, a customer with large debt funded assets (e.g. investment properties) will only be captured to the extent that interest payments affect their cash outflows (i.e. the loan itself is excluded). Also previously noted, there are stable econometric relationships from things like changes in wage payments and interest rate movements to cash flow. Interestingly, econometrically (i.e. looking at causality where one time series is useful in forecasting another), the data suggests credits cause subsequent changes in debits (such as consumer spend) but not the other way around. Put simply, unless there is growth in inflows, the increase in outflows will slow.

For further details, please see NAB Consumer Cashflow Analysis Q3 2020