March 23, 2023

Three speed economy and ESG pressure: Top business editors on what rate rises and a $20k mortgage hit mean for consumer spending, retail and brand purpose

39 minutes

Australia will escape a recession this year but not a downturn, per Sky News Business editor, Ross Greenwood. But the impact of rate rises means the average mortgage payer is now $20k out of pocket. If fewer people move home, fewer white goods and consumer electronics get bought – creating a negative cycle and something of a two-speed economy as the squeezed middle and lower income households cut back. But the third of Australians with no mortgage cash in the bank are still spending, and luxury is booming as a result. Meanwhile, Western Australia is as ever forging its own path and younger consumers still spending, creating a three-speed national economy. But Buy Now Pay Later buttons “are taking a hammering” in WA, warns The West Australian's Business Editor Sarah Jane Tasker. “That raises some concerns about when the pay later kicks in”.

Across the economy, the Federal Treasurer is talking up ‘values-based capitalism’, which will chime with brands putting purpose at their core. AFR economics editor John Kehoe thinks that trend is here to stay – though may be scuppered in the short-term should economic headwinds strengthen and cost hikes outweigh good intent. “But for the now, in the foreseeable future, people want governments and businesses involved in these sort of social and ESG causes.”

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