By Karina Barrymore
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THE `R' word has come out of the closet again for the first time
in almost 20 years, as another round of bad economic news hits the
headlines.
Although most economists are still shy of predicting a
recession, many households are already in one.
New data has revealed homebuyers and property investors have
backed right off, afraid of making a commitment in these uncertain
times. This could send the property market backwards.
The latest consumer survey released this month also found
confidence has fallen to a new 16-year low, as households continue
to be hit with soaring food and fuel prices.
And most people will shortly be getting their annual
superannuation statement, which is likely to show thousands of dollars
in retirement savings accounts has disappeared.
Master Builders Association chief economist
Peter Jones believes
Australia's housing market is suffering "serious collateral
damage'' from our economic woes.
"Residential building looks likely to remain in the doldrums
until well into the second half of next year,'' he said.
The latest fall in the Westpac and Melbourne Institute's index
of consumer sentiment has taken the experts by surprise.
Westpac chief economist
Bill Evans said the most likely
cause for the sharp fall in confidence was petrol price rises and
an almost 10 per cent fall on the share market.
The most dramatic falls recorded by the survey were people's
assessment of their personal finances during the next 12 months,
which fell by more than 12 per cent, and also their assessment of
general economic conditions during the next 12 months, which fell
by "a dramatic'' 15.5 per cent, Mr Evans said.
So, many people are already battling a personal recession, as
their disposable incomes recede.
AMP Capital Investors chief economist Shane Oliver said many
families were in a situation where their costs were going up faster
then their wages.
"For people with a higher than average exposure to costs such as
mortgages and rents, which is a big chunk of Australians, or they
are saving up to buy a house, they will be going backwards, so they
are already in recession,'' Dr Oliver said.
Although the economy is still growing, the strength is
mainly in the mining
sector
http://www.news.com.au/business/story/0,27753,24050235-5017313,00.html