Bank-bashing may be Australia’s national sport, but consumers rate them as the safest place to park their hard-earned cash.
A new survey has found the number of consumers who believe bank deposit accounts are the wisest place for their savings is at its highest level since Gough Whitlam was Prime Minister.
The finding was included in the latest survey of consumer sentiment, which found Australian households remained largely pessimistic.
The Westpac/Melbourne Institute Index of Consumer Sentiment showed a slight uptick of 1.6 per cent to 98.2 in September, from 96.6 in August.
But Westpac chief economist Bill Evans said the result was disappointing and signalled a long-term pessimism among Australian households, despite good economic conditions.
“This is the seventh consecutive month that the index has been below 100,” he said.
“The consumer is clearly stuck in an extended, cautiously pessimistic phase. In September last year, the index printed 96.9, so it has only increased by 1.3 per cent over the whole year.
“That is despite 125 basis points of rate cuts from the Reserve Bank, a more-or-less steady unemployment rate which is close to full employment, and some recent positive news around the threatening European situation.”
Amid all the pessimism, it appears nervous consumers are turning to the banks as safe havens for their cash.
The number of people who took part in the sentiment index survey and who favoured deposit accounts as the safest place for their savings rose from 32.6 per cent in June to 39 per cent in September – the highest proportion since 1974.
The proportion who preferred real estate as a safe investment fell from a quarter to just under a fifth, while those who opted for shares remained near record lows at 5.5 per cent.
More than 20 per cent believed paying down debt was the best way to save money.
Mr Evans said the proportion of respondents who preferred conservative savings options, including bank deposits and paying down debt, was now at similar levels to those during the global financial crisis in late 2008.
“In short, respondents are exhibiting a similar level of risk aversion in terms of their savings preferences as we saw in 2008,” he said.
Mr Evans said given the ongoing consumer pessimism, he still believed the Reserve Bank of Australia would cut the cash rate by 50 basis points by the end of 2012.
CommSec economist Savanth Sebastian said that recent doubts about the future of Australia’s mining boom could have had an influence on the sluggish consumer outlook.
“The recent high-profile cost-cutting measures taken by the mining sector seem to have weighed on consumer psychology, especially when coupled with the ongoing weakness in across other parts of the economy,” he said.
“Given the extent of the fiscal and monetary stimulus over the past couple of months you could argue that sentiment levels should be far higher, but the average Aussie is still not convinced that the outlook is all that rosy.”
