For some time now NAB has been refining the ability to capture the personal “cashflow” of consumer accounts. (i.e. a measure of cash inflows – money earnt – and cash outflows – money spent – to determine if an individual has a positive or negative net cashflow). 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 (eg. investment properties) will only be captured to the extent that interest payments affect their cash outflows (that is, the loan itself is excluded). We have managed to create a database going back to 2007.

The main focus of the analysis is quarterly but monthly data is also captured. We can also see this data by Local Government Areas (and post codes in large cities). As part of that analysis we have identified sources of cash inflows (eg. wages, Government payments etc) and cash outflows (ie. where the money is spent by type of consumer activity).

That allows us, among other things, to measure consumers responses to certain stimulus. Thus for example, there are stable econometric relationships from things like changes in wage payments and interest rate movements to cash flow. Interestingly, econometrically (ie. looking at causality where one time series is useful in forecasting another) 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 (September 2020).