Recession fears drive Aussie household saving

Australia’s household saving rising as economy falls into recession

Massive wealth destruction in household sector has sparked more precautionary saving

Reduction in credit availability will force many to save to purchase big-ticket items

Australia is in the midst of its first recession since the early 1990s. The recession started in 4Q 08 and probably will intensify in 1Q 09. The collapse in consumer confidence resulting from widespread fears over job losses and growing uncertainty surrounding the outlook for the global economy is driving a rise in household saving. The household saving rate already has started to increase after two decades of decline, rising from nearly zero at the end of 2007 to 3.9% in 3Q08, the highest level since 2000, but a stark contrast to the 10% levels observed in the 1980s. We expect the household savings rate to rise rapidly this year, possibly beyond earlier peaks.

Recession Fears Drive Aussie Saving

© Scoop Media