Australians are predicting a rough 12 months on the back of Trump's tariffs

West Australian

21 hours ago

Australians remain 'cautiously pessimistic' and aren't investing as the threats of US President Donald Trump's tariffs outweigh gains from falling interest rates and inflation.
Consumer sentiment edged higher in early June according to the latest Westpac-Melbourne Institute index for the month of June, sitting at 92.6 compared to 92.1 last month.
While this is a marginal improvement, sentiment around riskier assets remains low, with 55 per cent heavily favouring putting money in the bank or paying down debt.
Just 10.2 per cent say real estate is the wisest investment option, while 9.7 per cent nominated shares.
Westpac head of Australian macro-forecasting Matthew Hassan says consumers are waiting to see the fallout from the Trump tariffs.
'Indeed, responses to our quarterly question on the 'wisest place for savings' suggest that the tariff-related turmoil this year has seen what was already a high level of risk aversion intensify even further,' Mr Hassan said.
Mr Hassan said more Australians are becoming aware about news on 'international conditions' and it is seen as a 'very clear negative'.
'News recall on this topic has risen to a three-year high with 77 per cent of consumers assessing the news as unfavourable – easily the most negative of the major news topics.'
Westpac data also suggests it could be putting a handbrake on investing for years to come.
Consumer confidence around the economy slipped slightly in the June quarter, while Australians are feeling more stressed about their jobs with the unemployment subindex rising by 5 per cent.
Westpac also said expectations for the family finances over the next 12 months is down 1.9 per cent, while economic conditions over both the next 12 months and five years are predicted to slide.
Mr Hassan said consumers overall were in a 'cautiously pessimistic' mood with these international events offsetting gains domestically.
'On the positive side, the RBA's May interest rate cut and moderating inflation are providing significant boosts, particularly around buyer attitudes towards major purchases,' he said.
'But against this, more sluggish growth reads domestically and the unsettled situation around global trade is continuing to weigh heavily on expectations.'
One bright spot from the data showed more Australians think now is a good time to buy the family home, as the Reserve Bank of Australia's May rate cut and a slowing inflation rate provide a 'significant boost' towards buyers' feelings towards major purchases.
The 'time to buy a dwelling' index rose 3.6 per cent to 93.3.
While that marks the strongest reading since September 2021, pessimists still outnumber optimists with homebuyer sentiment still a long way below the historical average of 120.
'Despite this positive outlook for house prices, consumers remain relatively averse to real estate as an investment option and to risk in general,' Mr Hassan said.