Q+A: The Week Ahead | 20 April 2026
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Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Michael Thompson, and every Monday morning we're joined by economist Stephen Koukoulis to look at the week ahead. You'll find him at thekouk.com, that's T-H-E-K-O-U-K.com, and sharing his views and analysis on LinkedIn as well. Stephen, good morning. Good morning, Michael. Now, this week, it's a bit of a quieter week coming up from the RBA, certainly from the Bureau of Statistics, a bit quieter as well. But we had a bumper crop of data last week and a lot of stuff we need to talk about. I want to talk, first of all, about business confidence and consumer sentiment, which we saw last week, which, in a word, is
dismal, right? How worrying is this? How concerned should we be about where this is going to take us?
You're quite right. And this is one of the early readings we've had on a reaction to the petrol price shock because we haven't had any hard data because it only began in early March. And here we are in the middle of April. So we haven't had that data flow coming through. But the NAB survey on business confidence, the Westpac survey on consumer sentiment were incorporating data. the effect of this petrol shock. And as you said, consumer sentiment fell 12% in the month to a level of 80. And remembering that 100 is when you've got as many optimists as pessimists, so there's a lot more pessimists out there at the moment. And business confidence fell to minus 29, which was a sharp fall. Now, at face value, that's really bad, of course, because when consumers and business are feeling very uneasy...
when they've got pessimism about their own economic conditions, they tend to cut back their spending, they tend to cut back their investment and their hiring, if you're a business person. So they're really bad. Now, the only caveat I would place on that is that we've seen in the past the COVID pandemic, the GFC and other occasional short-term shocks, we can see a spike down that recovers relatively quickly. So My conditioning of that is that if we were to see the oil price revert back to the $70 a barrel region, if we were to see the Straits of Hormuz opening and all these sorts of things, these things would bounce back. But for the here and now, they are pointing to a very, very weak March, April, and even May part for the economy.
How quickly can things turn around then? Because, I mean, those are sentiment and confidence readings. So those could kind of fluctuate a bit essentially month on month. But the things that they flow into would take longer to turn around, right, in terms of, say, household spending. would take perhaps a little bit longer to feed through. Business investment, I imagine, would be quite a slow one to turn around. Once the belt has been tightened at business, it might take a little while for that to open back up again? Yeah.
Indeed, business investment, most of it, the vast bulk of it, are long-term projects. So, for example, a data centre, the one that's sort of very topical at the moment, that number that was boosting the business investment numbers late last year, they're still being built, you know, just because the petrol price and diesel price has gone up. They're still hammering in the nails and laying the concrete and all these other things. So that's going to be lingering and will not be altered. It's where your future lies. planning is. Shall we ramp up our construction of another warehouse? Shall we hire more people to run our retail distribution centre? These sorts of things.
What were last week's business confidence and consumer sentiment figures?
And for the here and now, so here we are, middle of April, as I said, They might be put on the back burner for a short while until we see what the effects of this oil shock are. For us consumers, we tend to be a little bit more agile. We tend to react more quickly. We've had the two rate hikes just to go on top of the petrol shock. So people react quite quickly. And by that, I mean a few months rather than 12 months to the fact that their monthly cash flows are being sort of undermined by, well, the rate hikes and the petrol shock.
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