Economic

Overall economic activity and perceptions of the future. 

• Growth: optimism, rising incomes, new product lines, higher positioning, consumer spending increase. 

• Recession: loss of confidence, more price sensitive consumers.

Reserve Bank decisions on interest rate increases or decreases also weigh heavily on the action of consumers. Higher interest rates means less family income can be spent on other items (as more is needed to pay for mortgage on the house). Reserve Bank decisions factor in domestic (Australian economic realities) but also the risks existing in the global market.

Consumer confidence is an economic measure of how individuals are feeling with regards to spending.

Poor economic conditions results in less discretionary spending (travel, clothes, non-essential items) and lower spending on essential items. A firm that produces or retails non-essential items are likely to be hit harder with lower sales.