Under pressure: More Australians are over extending to keep up appearances
As costs continue to mount, more Australians are feeling the weight of expectation to keep spending
1 min
More Australians are living beyond their means in order to keep up appearances, new data has revealed.
A survey by financial comparison site, Finder, has shown 30 percent, or 6.3 million people, have felt pressured into purchasing to keep up with family or friends. The research, which involved surveying 1,062 Australians, also showed 15 percent of people have gone into debt as a result.
The most common sources of over spending people felt pressured into included splitting an expensive restaurant bill despite ordering less (14 percent), taking an expensive holiday (11 percent) and buying tickets to an event (10 percent). However, six percent of Australians had bought a nice car and five percent had bought a house in order to keep pace with others.
Tellingly, the wedding industry made an appearance on the list, with five percent of people pressured into over extending for a bucks or hens night. Three percent reported feeling pressured to pay for someone’s baby shower.
Sarah Megginson, personal finance expert at Finder said ‘comparisonitis’ was exacerbated by social media consumption.
“Never before have we had such an intimate and behind the scenes view into other people’s lives – but it’s important to remember it’s a highlight reel,” Ms Megginson.
“The millionaire next door might be drowning in debt to afford that apparent life of luxury.”
She counselled against falling into the trap of living beyond your means because others appear to have more.
“Getting into debt, ruining personal finances and compromising your values are all very real risks when it comes to trying to keep up with what others have,” she said. “Success isn’t defined by what you have or where you holiday. Focus on future wealth by paying your debt off and dedicating more money to investments and savings than to material possessions.”
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3 min
President Donald Trump’s imposition of tariffs on trading partners have moved analysts to reduce forecasts for U.S. companies. Many stocks look vulnerable to declines, while some seem relatively immune.
Since the start of the year, analysts’ expectations for aggregate first-quarter sales of S&P 500 component companies have dropped about 0.4%, according to FactSet. The hundreds of billions of dollars worth of imports from China, Mexico, and Canada the Trump administration is placing tariffs on, including metals and basic materials for retail and food sellers, will raise costs for U.S. companies. That will force them to lift prices, reducing the number of goods and services they’ll sell to consumers and businesses.
This outlook has pressured first-quarter earnings estimates by 3.8%. Companies will cut back on marketing and perhaps labour, but many have substantial fixed expenses that can’t easily be reduced, such as depreciation and interest to lenders. Profit margins will drop in the face of lower revenue, thus weighing on profit estimates. The estimates dropped mildly in January, and then picked up steam in February, just after the initial tariff announcements.
“We are starting to see the first instances of analysts cutting numbers on tariff impacts,” writes Citi strategist Scott Chronert.
The reductions aren’t concentrated in one sector; they’re widespread, a concrete indication that the downward revisions are partly related to tariffs, which affect many sectors. The percentage of all analyst earnings-estimate revisions in March for S&P 500 companies that have been downward this year has been 60.1%, according to Citi, worse than the historical average of 53.5% for March.
The consumer-discretionary sector has seen just over 62% of March revisions to be lower, almost 10 percentage points worse than the historical average. The aggregate first-quarter earnings expectation for all consumer-discretionary companies in the S&P 500 has dropped 11% since the start of the year.
That could hurt the stocks going forward, even though the Consumer Discretionary Select Sector SPDR exchange-traded fund has already dropped 11% for the year. The declines have been led by Tesla and Amazon.com , which account for trillions of dollars of market value and comprise a large portion of the fund. The average name in the fund is down about 4% this year, so there could easily be more downside.
That’s especially true because another slew of downward earnings revisions look likely. Analysts have barely changed their full-year 2025 sales projections for the consumer-discretionary sector, and have lowered full-year earnings by only 2%, even though they’ve more dramatically reduced first-quarter forecasts. The current expectation calls for a sharp increase in quarterly sales and earnings from the first quarter through the rest of the year, but that’s unrealistic, assuming tariffs remain in place for the rest of the year.
“The relative estimate achievability of the consumer discretionary earnings are below average,” Trivariate Research’s Adam Parker wrote in a report.
That makes these stocks look still too expensive—and vulnerable to declines. The consumer-discretionary ETF trades at 21.2 times expected earnings for this year, but if those expectations tumble as much as they have for the first quarter, then the fund’s current price/earnings multiple looks closer to 25 times. That’s too high, given that it’s where the multiple was before markets began reflecting ongoing risk to earnings from tariffs and any continued economic consequences. So, another drop in earnings estimates would drag these consumer stocks down even further.
Industrials are in a similar position. Many of them make equipment and machines that would become more costly to import. The sector has seen about two thirds of March earnings revisions move downward, about 13 percentage points worse that the historical average. Analysts have lowered first-quarter-earnings estimates by 6%, but only 3% for the full year, suggesting that more tariff-related downward revisions are likely for the rest of the year.
That would weigh on the stocks. The Industrial Select Sector SPDR ETF is about flat for the year but would look more expensive than it is today if earnings estimates drop more. The stocks face a high probability of downside from here.
The stocks to own are the “defensive” ones, those that are unlikely to see much tariff-related earnings impact, namely healthcare. Demand for drugs and insurance is much sturdier versus less essential goods and services when consumers have less money to spend. The Health Care Select Sector SPDR ETF has produced a 6% gain this year.
That’s supported by earnings trends that are just fine. First-quarter earnings estimates have even ticked slightly higher this year. These stocks should remain relatively strong as long as analysts continue to forecast stable, albeit mild, sales and earnings growth for the coming few years.
“This leads us to recommend healthcare and disfavour consumer discretionary,” Parker writes.
Renovations in Yorkshire included the revamp of a 30-room wing where a descendant of the estate’s builder still lives.
President Donald Trump’s imposition of tariffs on trading partners have moved analysts to reduce forecasts for U.S. companies. Many stocks look vulnerable to declines, while some seem relatively immune. Since the start of the year, analysts’ expectations for aggregate first-quarter sales of S&P 500 component companies have dropped about 0.4%, according to FactSet. The hundreds …
Continue reading “Health Is Wealth When Tariffs Are Denting Profit Forecasts”
