The lowering of tax brackets has not increased consumer spending, with a majority of Australians only planning on parting ways with less than half of their windfall, new research has shown.
The latest consumer sentiment survey by Westpac and Melbourne Institute showed that half of eligible recipients have already received their tax benefit.
According to its results, 53 per cent of tax refund recipients plan to spend less than half of their return, while 25 per cent are planning on putting the entire payment into savings.
Just short of a third of consumers planned on spending all of their funds, while 16 per cent indicated that they plan on spending more than half.
Investors also not sure where to put their funds
Despite plans to save additional resources, a growing number of Australians are unsure where they should invest their funds, the Westpac-Melbourne Institute survey indicated.
Westpac’s chief economist, Bill Evans, weighed in on the results, noting that “perhaps most tellingly, some 9 per cent of consumers simply nominated ‘don’t know’”.
He said this is the highest reading on records going back to 1974.
The survey showed that consumers are heavily favouring “safe options”, with 61 per cent nominating deposits, superannuation or paying down debt.
Nest Egg has previously discussed strategies for investors.
Pessimistic about the immediate future
The consumer mood has lapsed back into slight negative territory again, with continued pressure on family finances and concerns about the near-term outlook weighing on sentiment.
Survey results revealed a 1.7 per cent reduction in consumer confidence moving it down to 98.2 points.
A score above 100 suggests optimism about the future, while a score below 100 suggests consumers are pessimistic about what lies ahead.
The sub-index tracking expectations for “finances, next 12 months” declined 2.2 per cent to be down 9.4 per cent since June and now sits at a four-year low.
The sub-group detail provided by the survey indicated a range of factors as contributing, including concerns around jobs, persistent weak wages growth and low returns on financial assets weighing on sentiment amongst those at or nearing retirement age.
Interestingly, despite a lack of current confidence, consumers’ longer-term expectations for the economy have been both steadier and more positive, with the “economy, next 5 years” sub-index the only component to post a rise this month, up 2.1 per cent.
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