READY TO SPEND UP

TAX refunds and a stronger housing market have consumers significantly more prepared to spend on housing and possibly retail as well, new data shows.

But the impact of the trade war between the US and China, as well as tension with Iran, are creating worries for Australian businesses.

Commonwealth Bank Household Spending Intentions research shows a significant lift in consumer positivity is under way.

“Spending intentions are improving in Australia, with a combination of income tax refunds and a stronger housing market leading the charge,” CBA chief economist Michael Blythe said yesterday.

“Significantly, the homebuying spending intentions series has moved back into positive territory and this should help drive a further improvement in retail spending intentions in the months ahead.”

But the ANZ-Roy Morgan weekly Australian Consumer Confidence index paints a different picture. It recorded a 4.8 per cent slide in people’s expectations for their finances over the next 12 months.

“While households feel OK about their current financial situation, they are clearly quite worried about the outlook, for both their own finances and the economy,” ANZ economist Felicity Emmett said.

“This is a disappointing development and suggests that expectations for tax and interest rate cuts to spur the consumer to lift the economy may be misplaced.”

Mr Blythe said the tax refunds flowing into CBA accounts were about 40 per cent above “normal” levels.

“The boost to household spending power is larger and coming through sooner than originally expected,” Mr Blythe said.

“The better news is that this tax refund money seems set to flow through to consumer spending.”

Treasurer Josh Frydenberg urged the Australian business community not to overreact to fears of a full-blown military conflict between the US and Iran.

President Donald Trump has declared the US is “locked and loaded” to take on Iran over its alleged role in the weekend bombings of Saudi oilfields.

Mr Frydenberg acknowledged this escalating rhetoric — along with Brexit and the ongoing US-China trade war — were weighing heavily on investors. But in a speech to the Business Council of Australia last night, he was expected to implore companies not to panic.

The treasurer was also expected to tell business leaders that devastating floods, fire and drought were also hurting communities and detracting from the economy.