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 (00:00):
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.

Speaker 2 (00:06):
Now.

Speaker 1 (00:07):
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 dropped quite sharply in the first three months of
the year. You'll recall Satish Ranshot, as Westpac senior economist,
has setish.

Speaker 2 (00:25):
Good evening Heather.

Speaker 1 (00:26):
Do you think this is material information? Is this adding
to the data suggesting that we're in recession again?

Speaker 2 (00:33):
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 the centrals and generally we're seeing a lot of
negative news, especially on the global front, that is worrying
a lot of households.

Speaker 1 (00:47):
Do you think that things are going to improve once
we start getting those rate cuts heading our bank accounts.

Speaker 2 (00:53):
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 in 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 1 (01:12):
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.

Speaker 2 (01:23):
I think it's probably going to be a bit soft
through the middle part of the year. Tomorrow's spikers are
probably going to show the economy grew by about point seven.
That'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 really

(01:47):
flowing through the economy and their agricultural boost that'll be
really important for a lot of regions.

Speaker 1 (01:52):
So are you saying, Okay, so we get this the
upteck in the first quarter, uptick in the last quarter,
and in between those two quarters. Technical recession probably.

Speaker 2 (02:01):
More of a little bit of softness rather than a
technical recession. I think there are some positives out there
for the economy. 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 1 (02:18):
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,
it goes down. But essentially, per capita, we're are just
this really long recession. Does it just continue through this year?
Does it?

Speaker 2 (02:33):
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 1 (02:49):
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 and say we're
growing again properly.

Speaker 2 (03:02):
I mean, 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 left. We are already
starting to see incomes and spending rights in many parts
of the country.

Speaker 1 (03:22):
Okay, now, I don't want to say I don't want
to be a negative ninni here, but we said this
last year, right, 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 2 (03:36):
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 Middle 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 outlook right now. I think
things are looking better, but there are those risks that

(03:56):
will have to keep an eye on.

Speaker 1 (03:57):
Okay, fingers cross, fingers cross, Satish, thanks so much, as
always really appreciate it's a teacher ranshot. We respect senior economists.
For more from Hither Duplessy Allen Drive.

Speaker 2 (04:05):
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