A regular review of interesting cultural shifts & marketing developments as viewed through the collective lens of the Stancombe Research + Planning Team

Wednesday, July 27, 2011

Why are we squirreling money away?


Consider the following economic snapshot of Australia:

  • Unemployment rate around 5%
  • In the middle of a mining boom
  • Relatively stable and historically low interest rates
  • Positive economic growth around the 4% mark
However, it seems we'd rather save our money than spend it ...
  • Australia's household savings ratio is about 11.5% (up from 2.2% in 07/08)
  • Australian households now have about $500 billion dollars worth of deposits sitting in banks
So why doesn't our rosy economic outlook compel us to enjoy the good times? Why have we become a nation of savers squirreling money away?


The media, experts and pundits have all put forward theories:
  • Baby Boomer investments have not recovered since the GST and meaning they are now worried about their standard of living going into old age
  • Price increases across necessities such as electricity, groceries and petrol have put pressure on discretionary spending
  • We have a two speed economy, e.g. retail vs mining
  • We are shopping online more and behaviour is being reinforced by a strong Aussie $ and good experiences 
  • Post-GFC residue
  • Bad economic news from Europe and USA 
  • It's been a bad news year, e.g. floods, fires, tsunami and earthquakes
  • Paying down debt is considered as smart 'saving' - and saving is the new spending
  • Happiness studies tell us consumption isn't going to make us happier
  • (...and according to David Jones) The Carbon Tax
Whatever the cause it's clear we are currently in the mood for saving rather than spending.

Maybe we just need the Aussies to win the Rugby World Cup?

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