Creditor Watch is forecasting that nearly one in 10 cafes, coffee shops and restaurants will go out of business in the next 12 months due to cut back in spending as cost-of-living pressures continue to mount for some households. 

However, we have some luxury spending that has seen strong growth, and in February, luxury car sales for Lotus, Lexus, and Lamborghini hit a record high, along with Porsche sales. Spending on cruises has bounced back from the pandemic lockdowns, and there is unbelievably strong demand for luxury cruising. Flight Centre has seen business class flight bookings almost double for FY 24. A report called, “It pays to be a boomer”, shows Baby Boomers are driving growth in leisure spending, and they hold a disproportionate share of wealth and are now retiring and travelling. These households are likely to have savings that benefit from the higher interest rates and any shares held directly or via Superannuation funds as the ASX index recently topped 8000. Overall, Household net wealth hit a record of $16.2 trillion in the March quarter (averaging $600K per person), driven by the rise in property assets, which accounts for 68% of household wealth. The housing market continues to defy expectations and is showing growth due to the shortage of housing supply. 

There is growing divide between mortgage free households who make up one third of households compared to the two thirds that have mortgages or are renting, the latter are feeling the squeeze of 13 interest rate rises which flow through to mortgage payments and rents. 

Households who owned their homes outright increased their recreational spending by 14% in 2023. Statistics on consumption by CommBank showed that only households over 60 years old increased their consumption, but 25-29 years old consumption shrank by 7% (in real terms, taking inflation into account). Charitable donations have dropped 6% year on year, and this has dropped across all age groups and the likely explanation is that people are cutting back on things that they can, “All age groups, irrespective of their pressures, in one way or another are cutting back,” says Wade Tubman head of analytics at CommBank IQ. 

Kruger, C. “Cost-of-living crisis? If you’re a Boomer, you’d hardly notice.” Sydney Morning Herald, 27 July 2024