UPDATE: Allison Jackson | July 08, 2009
Article from:  The Australian

CONSUMER confidence hit a 19-month high in July after the Rudd government's cash handouts and a surprising resilience in the jobs market lifted spirits.
The Westpac-Melbourne Institute Consumer Sentiment Index rose 9.3 per cent to 109.4 - the first time since December 2007 that optimists have decisively outnumbered pessimists.

Westpac chief economist Bill Evans said the index had risen 23.2 per cent in June and July, marking the biggest two-month increase on record.

“The second largest two-month increase was 18.8 per cent in March 1992, when households were finally convinced that the Australian economy was coming out of recession,” said Mr Evans.

“This is unquestionably a stunning result. My personal view had been that, given last month we saw the second largest increase in the index since we started measuring in 1974, any rise in July would have been a great result.”

Relief that Australia had dodged a recession also boosted sentiment.

But Mr Evans warned that consumer confidence was likely to take a hit once the jobless rate started to rise quickly and government handouts dried up.

The federal government’s $12.7 billion in cash handouts to low and medium-income earners in March and May resulted in an “instant boost to retail sales and supported this surge in confidence”, he said.

The unexpected resilience of the labour market also played a role, Mr Evans said.

“Households whose exposure to the sharemarket had been limited had expected that the major impact of the global financial crisis on their welfare would have been through the jobs market,” he said.

“However, over the last two months the unemployment rate has remained steady.”

http://www.theaustralian.news.com.au/story/0,,25750736-601,00.html