The last time households were as worried about their finances and the economic outlook the Soviet Union had yet to collapse, the Raiders had recently won their second premiership and Paul Keating had just declared Australia was in the "recession we had to have".
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The mood of consumers, as measured by the ANZ-Roy Morgan Consumer Confidence index, slumped to just 76.8 points in May, the weakest monthly reading since December 1990 as high inflation and a surprise interest rate hike shook sentiment.
The result came as the Australian Bureau of Statistics reported home approvals plunged 8.1 per cent in April to 11,594, the lowest reading since January 2012.
The readings add to evidence that economic activity is slowing.
In a statement to the Senate Economics Legislation Committee, Treasury secretary Steven Kennedy said growth likely peaked in the September quarter and "is now transitioning to a more balanced position between supply and demand".
Dr Kennedy said growth was expected to slow from 3.25 per cent this financial year to 1.5 per cent in 2023-24.
The treasury boss said household spending was being supported by historically low unemployment, strong workforce participation and rising nominal wages.
But he admitted high inflation and interest rates were squeezing incomes and hitting consumers unevenly.
"Some households carrying a large mortgage or with limited savings are likely to be finding conditions challenging," Dr Kennedy said. "High inflation environments can [also] be more challenging for those on low incomes, particularly if inflation is concentrated on essential products such as food, energy and cost of housing."
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The ANZ-Roy Morgan survey, based on 1485 responses, found people's assessment of their financial position compared to a year ago was at its second-lowest point since in at least 12 years and expectations for economic conditions in the year ahead were around historical lows.
Unsurprisingly, the study found limited enthusiasm to splurge on a major household item. The spending measure increased slightly to 65.5 points but was less than half the long-term average of 132 points.
Tumbling building approvals are amplifying concerns about the supply of new housing at a time when rental vacancy rates have dropped down to close to 1 per cent and the number of homes listed for sale has plunged.
Commonwealth Bank economist Belinda Allen said the slump in approvals did not bode well for those struggling with soaring rents or hoping for further moderation in house prices.
"The lack of new supply at a time when vacancy rates are low, household formation rates remain well below pre-pandemic levels and rapid population growth will mean rents and home prices will continue to face upward pressure," Ms Allen said.
Dr Kennedy echoed these concerns.
He said there were signs the housing market was stabilising after price falls last year and earlier this year but warned the home building industry "has not yet worked through" the downturn.
There are around 240,000 homes currently under construction, which is supporting the sector.
But Dr Kennedy said the big drop in approvals presaged tougher times ahead.
"This [the plunge in approvals] will naturally flow through to construction work done," he said, predicting investment in new homes to fall 2.5 per cent this financial year, 3.5 per cent in 2023-24 and 1.5 per cent in 2024-25.
Adrian Rollins
Adrian Rollins is economics correspondent for the Canberra Times
Adrian Rollins is economics correspondent for the Canberra Times
