Peter Munckton on stage at AdNews Brisbane L!VE.
Peter Munckton, chief economist and head of market strategy at Bank of Queensland, sees economy improving in 2025.
Australian households have experienced an unprecedented decline in their purchasing power over the past year as rising interest rates, inflation and cost of living pressures impact consumer wallets, he told the AdNews Brisbane L!VE audience.
“In 2022, the inflation rate was 8%. When was the last time we had a higher number than eight?” Munckton asked.
“30 years... That's two generations of people that have not experienced high inflation. This is one of the reasons why we've been struggling a little bit quite recently.”
Munckton said one of the biggest challenges for adland has been “finding people”.
He said the advertising industry had a record number of job vacancies around 18 months ago, but recently businesses have stopped looking because “it's just too hard”.
“We use the number of job ads around as a bit of a guide to how the industry's going,” Munckton said.
“The industry is slow, the activity slow, and it's not an industry thing, it's an economy thing.”
Munckton said real household disposable income - which is the income left over for consumption or saving after tax and interest payments, adjusted for inflation - has declined.
“We have never had as much of our incomes taken away in tax as we did last year,” he said.
“Things have gone backwards in a way we have not seen in six decades.
“The good news is that things are improving and one of the big reasons for that is we have tax cuts, the government’s reducing our electricity bill and inflation is going down.”
Munckton said Australians were feeling as bad at the start of this as during the recession, but people’s confidence is increasing as they begin to have more disposable income.
However, one of the big problems for businesses is that people are choosing to save their extra cash instead of spending it.
“If you've gone through the worst period you've seen since 60 years plus, is the first thing you're going to do with a couple of extra bucks in the bank go out and spend up big time?” Munckton asked.
“The answer is no… the answer is, ‘I'm going to save it’ or ‘I'm going to pay off debt’ but as confidence keeps improving we'll be spending more.”
Munckton said the businesses which have been hurting the most are the ones that rely on discretionary spending, but industries such as infrastructure are booming after an influx of government spending.
He said Australia’s population growth and immigration rate were extremely high last year which has helped boost the economy.
“The economy has been struggling but we're already starting to see better signs, because our income is starting to improve,” Munckton said.
“We will be spending more next year and the economy will be in better shape for it, but it’s that medium term question, which is a really creepy one, how can we ensure our incomes go up or more? How can we ensure that our incomes are spent more on the economy and less on tax payments and mortgage payments?
“How we answer those questions is going to be a really, really important part of how strong our economy will get into the future.”
AdNews would like to thank co-curators Brisbane Advertising Association and Brisbane Advertising and Design Club. AdNews would also like to thank supporting partners Audience 360, Blis, Nine and Quantcast alongside associate partners QIC, Listnr and MIQ for making the event possible.
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