Australia, the
US and New Zealand,
consumer confidence ratings have all told a similar story so far this year.
Starting the year at or around long-term average levels, the consumer confidence
ratings in each country have all dipped significantly in the April-May period,
and have recently showed signs of recovery.

The July Australian Roy Morgan
Consumer Confidence Rating
which has a scale of 0 to 200, is up three points to 118.1, 11.3 points higher than
the May low.

News/Washington Post Consumer Index figures
released yesterday, show that US consumer confidence has increased
every week since it reached a low of -19 on May 21. The Index now stands at -9
on the scale from -100 to +100, which matches the average in weekly polls since
December 1985.

The New Zealand Roy Morgan
Consumer Confidence Rating
which also has a 0 to 200 scale, has also followed a similar track, reaching an
all-time low of 104.8 in early May, but recovering to be

Confidence measures are generally viewed as a barometer of consumer spending,
which accounts for around two-thirds of the US, Australian and New Zealand
economies. Henry agreed when most analysts said the autumn (or spring in the
US) doldrums were caused by
skyrocketing petrol prices and upward interest rate pressure. However, petrol
prices are still at record high levels, and the pressure is still on central
banks to hike rates. Why the turnaround?

As consumers get
used to the prevailing economic environment, they are able to make changes to
their budget and continue spending. While increasing interest rates and petrol
prices leave them with less money overall, consumers have shown that they are
able to adapt.

However, Henry has
predicted further monetary tightening before the year’s out and the North Korean
crisis sent oil prices up again; the latest recovery in consumer confidence may
not last long.

More reading at
Henry Thornton.

Peter Fray

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Editor-in-chief of Crikey