Six in 10 believe that a recession is on the way, survey finds

The dismal mood among Australians comes despite unemployment remaining below 4 per cent, but after recent national accounts showed a collapse in real spending and living standards through 2023.

Australians are feeling the pinch from high cost of living and are pessimistic that the economy can escape recession in the coming year. Picture NCA Newswire/ Gaye Gerard

Nearly 60 per cent of Australians believe the economy is either already in recession or will tip into one in 2024, a new survey has revealed just days after the government’s mid-year budget update projected the economy was heading towards a so-called “soft landing”.

The dismal mood among Australians comes despite unemployment below 4 per cent, but after recent national accounts showed a collapse in real spending and living standards through 2023 that has left many households frustrated and struggling to make ends meet.

As Anthony Albanese on Monday morning listed cost-of-living pressures as the first of his priorities now and into the new year, the Resolve poll for Dye & Durham’s Australian Market Pulse also found that half of households believe they are financially worse off than a year earlier.

A third predict their situation will deteriorate over the coming 12 months, against a quarter of respondents who say they are optimistic their financial situation will improve in the coming year.

The survey of 1600 people also shows only a minority – a third – support the legislated stage three tax cuts, which come into effect from mid next year and mostly benefit higher income earners.

The final instalment of the former Coalition government’s three-stage income tax relief plan will result in a flat 30 per cent tax rate on annual earnings between $45,000 and $200,000 a year. The Parliamentary Budget Office estimates it will cost $20.4bn in lost tax revenue in 2024-25.

Overall backing may be low for stage three, but the survey also showed a greater share of those surveyed supported than opposed the tax changes, with 24 per cent against.

That left the greatest share of those surveyed undecided, at 43 per cent. Support has also trended lower throughout the year, dropping from 41 per cent back in February – with most of that change in opinion flowing to the undecided camp.

Unsurprisingly, support for the tax relief is highest among high-income households, but even then the view is a minority at 45 per cent, against 19 per cent opposed.

The potential impact on inflation may be on peoples’ minds, with an alternative model that skews the tax cuts further towards lower and middle income workers only seeing a modest increase in support to 40 per cent of respondents.

Independent economist Chris Richardson said the experience of other advanced economies suggested that consumer prices pressures will ease more quickly than expected, especially for goods, but that inflation will “hit a solid core that will be harder to melt”.