Confidence among Australians has stumbled for a second week in a row as concerns over recent volatility in financial markets turned to potential turmoil within the ranks of the Turnbull government.
Despite last week's strong employment figures, the result of the weekly ANZ-Roy Morgan consumer confidence index suggests people are more worried about Barnaby Joyce and his job following an extramarital affair.
"Events in Canberra may have added to the downward pressure, especially given the level of media attention," ANZ head of Australian economics David Plank said on Tuesday.
A Newspoll on Monday found a majority of voters believe Mr Joyce, the deputy prime minister and Nationals leader, should step down over his affair with a former staffer who is now pregnant with his child.
But Mr Joyce, who is presently on leave from his ministerial duties, says he's not going anywhere, describing suggestions he should be ousted as Nationals leader as a "witch hunt".
Confidence dropped 3.5 per cent last week following on the 2.6 per cent decline of the previous week.
The index now stands at a two-month low, although it still remains above its long-run average.
Consumer confidence is a pointer to future household spending.
Views on the economy and financial conditions all declined, despite last week's figures showing employment grew for a record 16 months in a row.
"It is likely that household finances will remain under pressure until a material pick-up in wage growth and, as such, household consumption remains an area of uncertainty in the outlook for 2018," Mr Plank said.
Wednesday's December quarter wage price index - the Reserve Bank's preferred measure of wages growth - is expected to be yet another sombre affair.
Economists expect wages grew at a modest 0.5 per cent pace in the final three months of 2017 to leave the annual rate at two per cent and broadly in line with the rate of inflation.
The Reserve Bank reiterated in the minutes of the February 6 board meeting, also released on Tuesday, its expectation of a pick-up in household income ahead.
However, it also warned there was still a risk to household spending if incomes increased by less than expected.
"In an environment of high household indebtedness, consumption might be particularly sensitive to adverse developments in household income or wealth," the minutes say.
But in a separate speech, Reserve Bank assistant governor Michele Bullock said while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low.
