Forecasts of Consumer Spending and Economic Growth

Forecasts of Consumer Spending and Economic Growth

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Not all Australians prefer lower interest rates.  Some prefer higher rates and some prefer no change.  This report is based on consumer survey tracking data and shows how interest rate preferences vary over time and by demographic.  It shows that interest rates have lost their power to influence aggregate consumer spending growth in this very low interest rate environment.  It also points to another way to boost consumer spending growth.


In his 2004 book “The Wisdom of Crowds”, James Surowiecki makes an interesting case that if you want to make a correct decision then large numbers of ordinary people can provide better advice than a small number of experts.  We have been researching this concept since 2005 and find that it is a potentially useful technique - but that applying it is rather more complex than suggested by Surowiecki.

We prefer the term "the wisdom of the masses" rather than crowds because the latter does not suggest sufficient diversity.

Consumer expectations have been found to be valuable for forecasting and predicting behaviour.  This includes economic and political outcomes.

The April 2021 update shows that economic fear has declined back to average levels.

The report also covers expectations about prices (automotive fuel and electricity); fertility; disease; vehicle ownership; and terrorism.


House prices are an important economic variable.  They are a major component of household wealth, a significant driver of consumer spending, and a hurdle for prospective first home buyers.  This report is based on a unique leading indicator of Australian house price inflation.


The drivers of consumer spending in Australia are identified and quantified.  The outlook for 2018, along with some scenarios, are included in this report.


Australia has avoided the dire predictions of deaths from the Covid-19 pandemic and the economy is recovering more quickly than expected from recession.  But we have a long way to go to get back to where we would have been, both in terms of population and the economy – it won’t happen in 2021.

There are uncertainties ahead concerning the ending of the pandemic and household income as government income support tails off.  Another uncertainty is the timing and result of the next federal election, which is due between August 2021 and April 2022.

The Australia in 2021 report analyses recent trends concerning population growth, economic growth, household income, and household spending.  It contains analysis of the mood of consumers in terms of willingness to spend and expectations about the year ahead.

Our analysis reveals a divided nation on two dimensions, which provides both opportunity and threats for consumer marketers and federal politics.


As 2018 progressed, new vehicle sales slumped. Is this the start of Peak Car or is it a perfect storm? Our report analyses the causes of the slump.


Identifies the key drivers of spending on food (total of supermarkets, specialy food, and liquor).  Provides scenarios for growth in the year ahead.


Australia's economic growth rate has slumped, largely driven by slowing household consumption growth.  Are the current and planned monetary and fiscal policies up to the job of significantly lifting consumer spending growth?  The answer is no, because there is no stimulus for those consumers most willing to spend. 


Income tax cuts in 2019-20 will give a much needed boost to Australia's household disposable income.  But will consumers spend all the extra money and will the impact be enough to lift consumer spending out of its funk? 


There are periods when GDP forecasts are most likely to be inaccurate.  This report identifies such times and the factor which causes inaccuracy.


Apparent consumption of alcohol in Australia has declined in per capita terms since 1978 and is still falling.  Our analysis of the data has identified the main drivers of this decline.  These are both demographic and economic factors.

Our model projects that per capita consumption will continue to decline, but that total alcohol consumption is likely to grow slowly.  Projections extend to 2030.

The per capita decline in consumption may seem like a good health outcome, but it is not actually clear that we are drinking less.  The demographic and economic factors may be confusing us.


Consumer economic pessimism has increased in Australia as at late 2019, to the highest level since the Global Financial Crisis.  Why?  How can sentiment be turned around?  Our analysis has some surprising answers.


Low fossil fuel consumption vehicle sales are growing strongly, despite weak new vehicle sales overall.  This momentum is expected to continue given community concerns about climate change and the cost of living.  This report provides three scenarios for sales to 2030.


The recent increase in the number of first home buyers in Australia is set to continue into 2021.  Updated April 2021 - strong demand predicted to continue.