Below trend growth to continue
Concern over cost of living climbs again as ‘considered consumers’ focus on the things they value most.
The NAB Consumer Stress Index rose for the third consecutive quarter in Q2’23 to 56.9 pts (56.6 pts in Q1’23) as cost of living pressures continue to climb. However, overall stress levels continue to trend well below the survey average (58.5 pts), albeit are above levels the same time last year (56.1 pts). Cost of living pressures remain by far the biggest cause of consumer stress. Cost of living concerns increased for the 7th straight quarter (to 69.9 pts – up from 68.9 in Q1’23 and well above the survey average of 66.3). Of concern, 1 in 3 (33%) consumers overall report very high levels of stress (90+ pts) – the highest number since mid-2014.
Consumer spending, according to NAB’s transaction data, rose in May, but only partially reversed the fall over March and April and so does not change our view that consumer spending growth is softening. Consumer confidence typically is not well corelated with consumers spending (the past couple of years have shown just how unreliable sentiment can be as guide to future and even current spending). But the gap between subjective pessimism and actual spending appears to be narrowing.
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