Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Financial comfort at record levels
ME Bank recently released the 21st edition of its Household Financial Comfort report, which seeks to measure how confident and comfortable Australians of many different backgrounds are with their financial position.
Created more than two decades ago, the report provides a powerful insight into the trends and more importantly concerns facing Australian households at a time of great change. The survey speaks with around 1,500 households, covering everything from their current financial situation, recent and expected changes, their ability to handle a financial emergency, current living expenses and finally their investment and retirement position.
“Financial comfort remains at all-time high for the average Australian household,” the report concludes, while noting that there a ‘substantial disparities…..across life stages, regions, workforce and housing tenure”. In terms of the latter, the survey highlights a concerning discrepancy between renters experiencing ‘renter stress’ and homeowners experiencing ‘mortgage stress’.
Not unexpectedly, the pandemic has seen household comfort with cash savings levels at record highs, with a large portion of this being forced savings due to restrictions. However, a quick visit to your local shopping centre and it becomes clear that many are ‘reverting back to old habits’ with savings being unwound and nine per cent of households already spending more than they earn. This bodes well for the retail sector in the coming years.
While a chorus of economists are highlighting massive concerns about inflation, households are only really concerned about those costs that impact them most. For instance, the cost of necessities is the biggest worry for households, with rent and fuel central to this. The survey suggests that a record two in three renters are experiencing ‘rental payment stress’ where their rent exceeds 30 per cent of their income.
Some 43 per cent are concerned about the cost of necessities, with the Russian invasion of Ukraine unlikely to help the price of fuel for the foreseeable future. They are less concerned about the cost of discretionary items. 35 per cent of borrowers flagged they were under mortgage stress, with the Reserve Bank likely keeping a close eye on this to understand the implications for the economy should the central bank be forced into hiking rates earlier than expected.
Across life stages, retirees continued to report the highest comfort, while single parents reported very low levels of comfort. Across the workforce, white-collar worker comfort rose to a record level, while blue-collar worker (who have been largely unable to work from home during the pandemic) comfort has slipped to lower than pre-COVID levels.
