Daily Commentary BY THE CURVE TEAM –

Consumers Looking Ahead

11th of February, 2021

Confidence levels suggest consumers are seeing past the imminent downside effects from covid.

Confidence levels rose again in February to 109.1, up 1.9%. This is a remarkable recovery from the depths of Covid, with the latest read only just lower than the 10 year high posted in December.

Relativity is definitely a factor in the numbers. The bounce back after the GFC was similarly very strong.

Victoria and NSW also have the highest confidence levels among the states and have been the most acutely affected by covid recently. As consumers become accustomed to things returning to normal, confidence should slide back down.

Nonetheless, confidence is significant as it will drive consumption during the economic recovery. Savings rates remain very high and government wage subsidies will end in the middle of the year.

If consumers are weary of a poor economic environment, they will be reluctant to spend their savings. Positively, the unemployment expectations index declined 3.8% for the month, which bodes well for consumer spending.

Josh Stewart

Associate- Money Markets