“Different households will do different things but what the Future Consumer Index data shows us is that if there is a group more likely to cut spending than drive down their savings, it’s families with dependent children,” Masters says.
To date, roughly 2.1 million couples with dependent children spend about $240 billion on goods and services each year, while single parent families spend about $70 billion. Of that combined spend about $110 billion goes directly to discretionary goods and services* including cars, clothes, holidays and cultural and leisure activities.
More than 35 per cent of households with dependents indicated they were saving more to prepare for the winding down of the Federal Government JobKeeper and JobSeeker stimulus in late March, compared to the national average of 22 per cent.
Assuming about half of all dependent households act on their concerns about future financial security and cut their discretionary spending by 10 per cent, that translates to a $5.5 billion hit to the economy over the next 12 months.
Lingering consumer impacts still to play out
EY Partner and Consumer Insights Lead, Marc L’Huillier, says that while we have seen confidence rise as the pandemic’s impact on daily life has tapered, an undercurrent of anxiety still prevails.
“The emotional impact of the pandemic on people was pronounced and we are only starting to understand how that legacy will play out. Many Australians were hit hard quite quickly or were bracing for the hit for an extended period. They’ve become much more introspective, thinking markedly differently about the future. Many still remain wary about what lies ahead, even as they start to enjoy many aspects of life again and release the pent-up consumer demand.”
L’Huillier says families with dependent children will have a long memory of the emotional tumult of 2020 and will remain guarded. “They are at a point in life where they are one of the most exposed segments and that sense of vulnerability is ever present, even when all the talk may be about the momentum in the economy.”
“The sense of unease goes up a level for those who have seen key job-related government support for their employer dialled down or switched off. That translates to different behaviour as well as a continuation of the desire to create a financial buffer for the household – something that is hard for the large tranches of Australians who live pay-to-pay.”
L’Huillier also says people are looking at the way they spend their time and money, challenging things they may have done by rote in the past. “The reality is that Australians thrive on certainty and that’s not there yet for some of the segments that feel most susceptible. We’ll continue to see these people downshifting spend, remaining cautious and reflecting where they spend their money. As more stability returns in the longer term, across the wider consumer base we'll also see a much more assertive consumer when it comes to key areas like sustainability and the extent to which brands and organisations demonstrate the right values. The most valuable competitive edge today will come from knowing your consumers better than your competitors."