This is from Westpac's Chief Economist Bill Evans commentary on the consumer sentiment data earlier today

(Post is here: Australia - Westpac Consumer Confidence (Dec.): -3.9% m/m (prior -1.1%)

The post includes a cute GIF, check it out!)

Evans discusses the result of the sentiment survey:

  • Today's result has jolted the air of stability and confidence
  • The Index is now at its lowest level since April this year
  • Now a clear majority of pessimists over optimists
  • It is likely that the key reasons behind this fall in Confidence are related to renewed concerns around the economy; interest rates; and the labour market
  • All components of the Index fell in December

OK, moving on to the outlook, this is Evan's view on the RBA, which encapsulates his views on the economy:

The Reserve Bank Board next meets on February 7. We expect the Board will decide to keep rates on hold. While the 0.5% contraction in the Australian economy in the September quarter would have come as a surprise and that result has undoubtedly impacted Consumer Sentiment I expect the Board will be more confident about the economic outlook for 2017.

  • A boost to the terms of trade from higher commodity prices
  • sustained strong conditions in the major housing markets
  • still positive forward indicators for jobs
  • a stronger global outlook
  • a boost to resources exports
  • and a significantly reduced drag from mining investment

point to the Australian economy's growth rate lifting from the current 1.8% to 3.0% in 2017, precluding any need for further rate cuts.

Furthermore, the benefits of a limited boost to spending from a lower cash rate are likely to be more than offset by ongoing risks to financial stability from lower rates.

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All good points ... but as I posted earlier ....

  • We were promised a bounce back for Q4 GDP after the poor Q3 GDP result. By my reckoning of the data since (admittedly early days for Q4 indications), exports have disappointed, business conditions have fallen (business confidence went up though) and now consumer confidence lower. Not lookin' good so far!