Daily Commentary BY THE CURVE TEAM –

Consumer Angst Abating

27th of May, 2020

As containment measures rollback, angst among consumers appears to slowly be abating.

The latest weekly consumer sentiment survey saw the index edge higher once again. Since collapsing at the outset of the lockdowns, the index has been creeping higher over the past few weeks.

According to the survey, the biggest improvements from the lows have been expectations for family finances over the year ahead, followed by the longer run prospects for the economy. Meanwhile family finances compared to a year ago continue to languish well below pre-crisis levels, as do expectations for the economy over the year ahead. This means overall, the index is still well below pre-crisis levels.

Ultimately, what the survey suggests is that while consumer sentiment is starting to improve, we are still a long way off consumers being completely comfortable with the outlook. It also means that the post lockdown pick up in consumer activity might not be sustained once the pent up demand starts to subside.

It could take some time for consumer confidence to return to pre-crisis levels. Much of that has to do with uncertainty around the outlook, which is tied to crisis induced measures such as JobKeeper, eviction bans and mortgage holidays. It won’t be until these crutches supporting the economy are removed that the outlook with become clearer.

David Flanagan

Director - Interest Rate Markets