ANZ economists say consumer confidence has passed “peak pessimism” following the unexpectedly poor March quarter GDP (gross domestic product) result.

The ANZ-Roy Morgan Consumer Confidence Index for September rose from 92.0 to 94.6, breaking a 10-month falling trend.

ANZ notes the responses before the March quarter GDP result became known were running at around 96; following the release, they collapsed to 77.

However, that came from a very small sample – just 60 people – “so take it with a large grain of salt.”

“The glass-half-full interpretation is that confidence probably would have lifted by more were it not for the GDP headlines,” ANZ’s economists said.

“The glass-half-empty view is that confidence has probably taken a hit.”

The proportion of consumers thinking now is a good time to buy a major household item rose by one point, but remains negative 11%.

Two year-ahead inflation expectations were unchanged at 4.8%, although ANZ says that’s unsurprising given food price inflation is running at 5%.

Perceptions of current personal financial situations (better or worse off than last year) lifted 11 points to -13%.

ANZ comments that, while still low, the reading hasn’t been higher than -12% since early 2022.

A net 14% of respondents expect to be better off this time next year, up one point.

Perceptions regarding the economic outlook over the next 12 months fell three points to -23%. The 5-year-ahead measure lifted three points to +6%.

House price inflation expectations dropped from 3.0% to 2.5%, the lowest since July 2024.

ANZ concludes it’s “not all doom and gloom out there.”

“The proportion of households saying that they feel worse off than a year ago has been steadily declining, even as unemployment has been creeping higher. Consumer arrears have been dropping, according to credit rating agencies.”

“The RBNZ has pivoted to supporting the growth outlook, rather than fretting about the near-term inflation outlook. Monthly filled jobs have returned to modest growth.”

Without downplaying the real pressures households are under, ANZ’s economists say, “it simply isn’t the case that the economy is spiralling downwards.”

ANZ expects expect the economy “to put in a markedly improved performance over the next 12 months than
the last – though that isn’t saying a lot, to be fair.