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More economic pessimists than optimists

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The boost that consumer confidence got after the federal budget is starting to wear off, as households fret about their financial futures.

The ANZ-Roy Morgan consumer confidence index fell 1.2 per cent last week, but is still 10 per cent higher than a year ago.

ANZ chief economist Warren Hogan said it was disappointing that consumer confidence was not getting the sustained lift it needed to give the economy and spending a boost.

“If confidence proves unable to sustain the recent bounce, growth in consumer spending looks set to stay in the doldrums,” he said.

The slump in consumer confidence was also reflected in the Westpac/Melbourne Institute index, released today. It showed consumer sentiment fell by 6.9 per cent in June to 95.3 points, after rising 6.4 per cent the previous month following the federal budget and the Reserve Bank’s rate cut.

With the index dipping below 100 points, the June reading indicates there are more pessimists about the economy than optimists.

Westpac senior economist Matthew Hassan described the result as “surprisingly weak”, with people concerned about falls on the share market, soft conditions in the labour market, and the outlook for house prices.

“It now appears that last month’s surge of optimism was a brief relief rally,” he said.

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