Australian households were already on edge before the bombs started falling in Iran.<\/p>\n
The cost of living was high and inflation was accelerating again, forcing the Reserve Bank to start ratcheting up interest rates.<\/p>\n
It\u2019s clear that this is a time of deep uncertainty and anxiety<\/a>.<\/p>\n Nevertheless, it is striking that more than six in 10 Australians reckon the country is either already in a recession, or will be in the next 12 months, according to a poll conducted for the Nine newspapers<\/a>.<\/p>\n Just 15% thought the country would avoid a deep downturn, while 22% said they were unsure.<\/p>\n These results \u2013 alongside collapsing consumer confidence \u2013 reflect a deep and abiding pessimism in the community about the state of the economy.<\/p>\n Graph showing crash in household confidence<\/a><\/p>\n But the experts do not share this degree of pessimism.<\/p>\n Economists, on average, believe there is a 20% chance of recession in the next 12 months, according to a Bloomberg survey.<\/p>\n That\u2019s not zero, but it\u2019s only up from 15% leading into the Iran war.<\/p>\n Gareth Spence, the head of Australian economics at National Australia Bank, said the Iran war had doubled the chance of a recession to 20%.<\/p>\n That\u2019s a significant increase, but Spence says \u201cthe way I am thinking about it is that we could have a bit of a downturn, but not a recession\u201d.<\/p>\n At the moment, the NAB forecast is for growth to slow to 1.5%, from the prewar estimate of 2.2%. That\u2019s a \u201cmaterial downgrade\u201d, Spence says.<\/p>\n Unemployment will rise from 4.3% to 4.8%, he reckons. Again, a meaningful increase, but not much different from where they thought it would be earlier in the year.<\/p>\n Belinda Allen, the head of Australian economics at the Commonwealth Bank, has been tracking the weekly card spending data from the bank\u2019s millions of customers.<\/p>\n So far the figures show that, even after accounting for an unwelcome spike in fuel costs, that spending is holding up and even showing some growth.<\/p>\n