The Australian consumer has exited lockdowns in a strong financial position. In the December 2021 quarter, household income grew 5%, which is better than long-term trends and the savings rate was 14% of income. We estimate households have $200 billion in excess savings to fund holidays and a return to normal spending patterns. This bodes well for a soft landing in retail sales for 2022.

Australian GDP fell by 1.9% in the September 2021 quarter, but the national accounts provide a more positive take on the consumer. Wages grew, savings lifted and, even with lockdowns, some areas of retail saw growth like food and online. The statistic that raises the most significant debate is savings. Household savings were 18% of income and households have saved more than $365 billion since the start of 2020. Such significant savings makes us more confident of a soft landing in retail over the next 12 months.