- Consumer confidence is at a 16-year low
- Many households have costs rising faster than incomes
- Advice: Guides and tools to manage your money
THE `R' word has come out of the closet again for the first time in almost 20 years, as another round of bad economic news hits the headlines.
Although most economists are still shy of predicting a recession, many households are already in one.
New data has revealed homebuyers and property investors have backed right off, afraid of making a commitment in these uncertain times. This could send the property market backwards.
The latest consumer survey released this month also found confidence has fallen to a new 16-year low, as households continue to be hit with soaring food and fuel prices.
And most people will shortly be getting their annual superannuation statement, which is likely to show thousands of dollars in retirement savings accounts has disappeared.
Master Builders Association chief economist Peter Jones believes Australia's housing market is suffering "serious collateral damage'' from our economic woes.
"Residential building looks likely to remain in the doldrums until well into the second half of next year,'' he said.
The latest fall in the Westpac and Melbourne Institute's index of consumer sentiment has taken the experts by surprise.
Westpac chief economist Bill Evans said the most likely cause for the sharp fall in confidence was petrol price rises and an almost 10 per cent fall on the share market.
The most dramatic falls recorded by the survey were people's assessment of their personal finances during the next 12 months, which fell by more than 12 per cent, and also their assessment of general economic conditions during the next 12 months, which fell by "a dramatic'' 15.5 per cent, Mr Evans said.
So, many people are already battling a personal recession, as their disposable incomes recede.
AMP Capital Investors chief economist Shane Oliver said many families were in a situation where their costs were going up faster then their wages.
"For people with a higher than average exposure to costs such as mortgages and rents, which is a big chunk of Australians, or they are saving up to buy a house, they will be going backwards, so they are already in recession,'' Dr Oliver said.
Although the economy is still growing, the strength is mainly in the mining sector
http://www.news.com.au/business/story/0,27753,24050235-5017313,00.html