Australians are changing the way they save and spend money, as the impacts of COVID-19 on people’s everyday lives become more noticeable.
About a quarter of consumers reported spending more than they earned in the past three months, according to NAB’s Australian Consumer Anxiety Survey for Q1 2020.
Among people earning less than $35,000, that number soared to 37 per cent, indicating that low income earners are bearing the brunt of the economic shock.
Survey participants said their incomes have fallen and their savings in particular saw a strong drop in the past three months.
Expectations for both income and savings in the next 12 months have declined while debt is tipped to pick up.
Overall, consumer sentiment became more negative, as NAB’s Consumer Anxiety Index increased by 2.4 points to 60.1 points in the three months to March 2020.
This is despite the survey predating the more recent restrictive lockdown measures to slow the virus’ spread.
Concerns around job security, which was up by 5.8 points to a survey high of 52.3 points, saw the sharpest spike in anxiety.
“While the full implications of the virus remain uncertain, there is a broad understanding among Australians that life is going to be very different for quite a while yet,” NAB Chief Economist Alan Oster said.
Spending less on non-essentials
The survey found that consumers were spending more on groceries, medical expenses and paying off debt.
Interestingly, some regular costs of living, such as transport and travel, eased as Australians are kept at home due to the coronavirus.
More people are slashing their budgets for non-essentials such as entertainment, eating out and holidays.
“Although purchases of certain products and services have been increasing, in some cases dramatically so, demand for discretionary items has clearly fallen,” Mr Oster said.
“We can clearly see this behaviour in our customer spend data as purchases of food and other supermarket items are surging, while spending in other parts of the economy, particularly those associated with tourism or hospitality, are falling sharply.”
The report noted that the coronavirus has strengthened digital trends that were already on the rise, such as online shopping and working remotely.
“The ability of consumers to adapt to new ways of purchasing, working and living has never been clearer,” Mr Oster said.
“A key question that will shape consumer behaviours going forward is whether changes to consumer habits are becoming entrenched and hence much harder to break as the crisis deepens.”