Yesterday I went through the latest ABS data on retail and highlighted that the Black Friday sales supported household spending growth through November. This is an important indicator on the state of the economy and is a factor which will influence the RBA’s February rate cut call.
But just like the proverbial Schrodinger’s cat – a famous thought experiment that demonstrates the idea in quantum physics that tiny particles can be in two states at once until they’re observed. It asks you to imagine a cat in a box with a mechanism that might kill it. Until you look inside, the cat is both alive and dead at the same time, its hard to tell what is really going on.
Actually, analysts are all over the place on these numbers, and the household spending indicators we got today from the ABS continued the confusion.
So it remains to be seen whether this uplift will be carried into 2025 or if it is a result of price-sensitive consumers capitalising on bargains and the typical festive season spending surge.
Let me know in the comments below, did you spend big over the holiday period, or hunkered down seeking bargains through the sales, along with many I see in my surveys?
I suspect both is true, which will make the RBA’s job hard next month. Though the simple truth I come back to is more are being sucked into the negative cash flow vortex thanks to the higher for longer interest rates. Which is not good news for the cat in the box!
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