Why the Consumer has not reacted to 2% of rate cuts in the last 18 months

Here are some comments from my brother in law, Richard Coppleson from Goldman Sachs... It is worth reading not withstanding the fact one typically does not agree with the in laws, but I DO!!

Its worth highlighting something I had in the Afternoon Report a year ago -as it in some ways continues to explain why the 2.00% cut in rates over 18 months & 1% since this was written a year ago - have failed to stimulate the consumer.  To me its a bit like the electorate stopped listening to the Government a year ago & are waiting until the election to get rid of them. This is the same with the consumer - they have battered down in the bunker   until they are convinced that things are going to get better - the long list below has plenty of additional concerns added to it since then.

Maybe a change in government lifts consumer sentiment - because after 7 rate cuts  over 18 months  with cash rate going  100 year lows of 2.75% & now fall in the currency - if things don't show signs of picking up over the next 3 months - then the Australian economy will be the Titanic - heading straight for the iceberg & despite everyone knowing its going to hit - all we'll be able to do is brace for the impact...  Hence the saving rate remains high & people prefer pay off their home loans and bunker down...  Things are dire & the RBA knows it.

For the non -mining economy  we have already been in a recession for the last 6 months & when the mining economy slows by the end of 2013 the whole country will be dragged into the 1st official recession since the early 1990's.  The hour glass has just been turned over & the sand is moving rapidly through - if it gets to empty by December 2013 - we're all stuffed & going into recession. One thing we can't say now,  is that we haven't been warned..

This list is what we were going through exactly 1 year ago from May 2012 - this is why the consumer has still not responded to the rate cuts...

From May 2012 - this is why the consumer has still not responded to the rate cuts...
The cost of living worries have been seeing people saving with numerous issues seeing the domestic economy under pressure as households across the board are being smashed with at least 25 pressure points ..

 (1) Sydney Water looking to increase the average household bill by 31% over the next four years.
(2) From July, Sydney households can expect to pay 20% more for power.
(3) The average gas bill will hike 8.3 per cent.
(4) The average petrol price paid by motorists at the $1.40 per litre last month, the highest since October 2008.
(5) Home prices: House prices in capital cities have fallen 4.5 per cent in the last year, according to RP Data. (6) Council rates going up with more than a third of councils have applied to raise them past the 3.6 per cent ceiling.
 (7) Fees at top private schools are about to crack the $30,000 mark for Year 12 students.
(8) Tax on super contributions about to be doubled for 15% o 30% (but only those  on over $300,000)
(9) Tolls on motor ways going up again: The average toll for a daily commute is tipped to rise by 6 per cent per year.
(10) Rising coffee prices -  prices could increase by 50c  a cup after heavy rains wiped out crops in Central (11) Increased fuel charges on flights: Qantas increased its fuel surcharge on international flights by up to $30 and domestic flights by about 5%.
(12) Retail spending: National retail sales posted their weakest annual growth in 27 years last year as consumers cut spending in favour of saving and paying off bills.
(13) Falling home sales: Sydney new home sales hit the lowest levels since 1994. The number of contracts signed for new homes was down 9.4% from the month before.
(14) Falling consumer confidence: Pessimism has far outweighed optimism this year, with the Westpac/Melbourne Institute finding national consumer sentiment fell 5 per cent in March
(15)  Falling business confidence: Dun & Bradstreet this week found a third of firms cited the lack of further interest rate cuts since December as the primary influence on diminishing of their operations.
(16)  Cut in private health insurance rebate: One of the nation's biggest health insurers, Bupa, have suggested customers could pay between 10 and 30 per cent more under proposed means-testing changes, which kick in from July.
(17) Carbon tax: From household bills to petrol prices and even the price of a haircut, day-to-day services and products will cost more under the carbon tax
(18) Mining tax: Miners are tipped to boost government coffers by $10.6 billion over three years, with miners warning the tax was putting the industry's strength at risk.
(19)  Train fare hikes: The cost of a single adult rail ticket has risen between 20 and 40c a day, costing an average $144 extra a year.
(20) Highest interest rates in the Western world: While 3.75 per cent may seem like a low cash rate, Australians still pay a high rate when compared to the near-zero rates in Japan, Europe and the US
(21) Alcohol: Taxes on alcoholic products have forced consumers to pay 15 per cent more on average for low-strength spirits.
(22) Struggling retail sector: Department store giant David Jones last year warned it was facing the worst retail malaise in recent history, with customers flocking to online shopping en masse.
(23) Slowing growth in China: With early indicators suggesting China's economy was slowing, economists have warned Australia's economy risks falling into a deeper slump unless Australians start reopening their purse strings.
(24) Flood levy: Australians earning $60,000 have been made to pay $50 a year extra, until June 30, under the government's flood levy changes from last year.
(25) Apple tax: Australians inexplicably pay on average 60 per cent more for iTunes songs than their US counterparts. (thanks to the Daily Telegraph for highlighting many of these)