Don’t bank on a consumer cash splash

Consumer sentiment has recovered to its pre-budget levels but slow wage growth and rising unemployment mean a sustained increase in household spending is unlikely to follow.

Could the household sector be ready to turn the corner? Although the budget remains a noose around the government’s neck, measures of consumer sentiment have regained their post-budget losses. But will consumer sentiment be enough to overcome declining real wages and a soft labour market?

The ANZ-Roy Morgan consumer sentiment index rose further over the past week and is now at its highest level since January, and a touch higher than before the budget.

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