Satish Ranchhod: Westpac senior economist on consumer confidence going up in June

New data shows consumer confidence has gone up - but overall levels show people are feeling more pessimistic than optimistic about the economy. 

The Westpac McDermott Miller Consumer Confidence index rose two points in June to 91.2, a modest rise from last quarter's drop.

Westpac senior economist Satish Ranchhod says negative news and the rising cost of living are contributing to an uncertain outlook, but confidence is likely to improve once more mortgages drop.

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:17):
Gavin Gray is with us out of the UK shortly.
I have got that tip line for you, so stand by.
We're going to get to it twenty five away from
seven now. Consumer confidence has improved, but we're still overall
more pessimistic than optimistic about the economy. That is from
the latest Westpac consumer Confidence survey for the June quarter,
comes after confidence dropp quite sharply in the first three months.

Speaker 3 (00:35):
Of the year.

Speaker 2 (00:36):
You'll recall Satish Ranshot as Westpac senior economist.

Speaker 3 (00:40):
Hastish good evening, Heather, Do you think this.

Speaker 2 (00:43):
Is material information? Is this adding to the data suggesting
that we're in recession again?

Speaker 3 (00:50):
I think it really highlights that the middle part of
the year has been pretty tough for a lot of households.
We're still seeing a lot of pressure from rising costs
of essentials and generally we're seeing a lot of negative news,
especially on the global front, that is worrying a lot
of households.

Speaker 2 (01:04):
Do you think that things are going to improve once
we start getting those rate cuts heading our heading our
bank accounts.

Speaker 3 (01:10):
I do think we are going to see some bitter
times for a lot of households in the second half
of the year. As you say, we've had some big
drops and interest rates about two hundred basis points for
a lot of mortgage rates, but a lot of households
haven't rolled over on their mortgage yet. As we go
through that second half of the year, a lot of
households could be seeing a lot more money in their
back pockets as their mortgage rates drop.

Speaker 2 (01:29):
Okay, So tell me how you think, because we've got
the GDP data coming out tomorrow, right, tell me how
you think the year looks in terms of the economic
growth story quarterback critical.

Speaker 3 (01:40):
I think it's probably going to be a bit soft
through the middle part of the year. Tomorrows speakers are
probably going to show the economy grew by about points
even it's sort of around a trend rate. Probably a
little bit mixed across the economy. But really, if we're
looking for a pack up and activity, we're going to
see it more through that latter part of the year,
with both those interest rate cuts heading people's back pockets,
but also more of that income from high commodity prices

(02:03):
really flowing through the economy and their agricultural boost. That'll
be really important for our lot of regions.

Speaker 2 (02:09):
So are you saying, okay, so we get we get
this the uptick in the first quarter, uptick in the
last quarter, and in between those two quarters. Technical recession.

Speaker 3 (02:17):
Probably more of a little bit of softness rather than
a technical recession. I think there are some positives out
there for the economic tourisms are bright spot. That's improving
those agricultural export incomes. They are looking great for a
lot of regions. But it's really more of a gradual
picture for households. But things are slowly getting better.

Speaker 2 (02:35):
Okay, But statish, what we have seen in the last
two or three years now is that the data goes
it's lumpy, it goes up, it goes down, and goes
up and goes down. But essentially, per capita, we're just
this really long recession. Does it just continue through this year?
Does it?

Speaker 3 (02:50):
I don't think it's going to keep getting worse. It
might be a little bit soggy. In the NETTA. We
have still been dealing with some pretty powerful financial pressures
like increases and living costs, but slowly some of those
pressures are easing off and especially those lower interest rates.
That'll be a relief for a lot of households.

Speaker 2 (03:06):
When do we start When do we get out of
this bit though, where we're talking about it easing off
and getting better, and we're actually now we're into positive territory.
We're firmly above the zero and we can say we're
growing again properly.

Speaker 3 (03:19):
And I think by the time we get to the
end of this year, things will really start to feel
different for many parts of the economy. Our labor market
has been soggy, but slowly we'll start to see more
people being hired, as household spending picks up, and as
more of those farming incomes the lift. We are already
starting to see incomes and spending rights in many parts
of the country.

Speaker 2 (03:39):
Okay, now, I don't want to say I don't want
to be a negative ninni here, but we said this
last year eight We said just survive to twenty five
and then it's bright all the way through. And you're saying, basically,
don't worry, it'll be bright next year. What are the
chances that you're wrong?

Speaker 3 (03:52):
I mean, if something's going to surprise us, it's probably
going to be coming from the global economy. I mean,
we've seen the headlines recently, especially coming from the midd East.
There's ongoing concerns about tariffs. But if we think about
the domestic story, it is looking better. It's great that
we can manage that global out look right now. I
think things are looking better, but there are those risks
that will have to keep an eye on.

Speaker 2 (04:13):
Okay, fingers cross, Fingers cross, Satish, thanks so much, as
I always really appreciate it. Satish Ranshod wespect senior economists.

Speaker 1 (04:19):
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