Consumers were in a bad mood even before Joe Hockey handed down a disappointing mid-year budget review.
One gauge of consumer confidence fell again in the past week - before the treasurer revealed a $10 billion blowout in the budget deficit for 2014/15 to more than $40 billion.
Westpac chief economist Bill Evans said the deterioration in the mid-year economic and fiscal outlook released on Monday came as no surprise.
"That may mean that we won't get the sort of shock to consumer sentiment associated with a $40 billion deficit this year," Mr Evans told ABC television.
Confidence collapsed about the time of the May budget.
The ANZ-Roy Morgan consumer confidence gauge fell a further 0.2 per cent in the past week, following the 3.1 per cent drop the previous week.
ANZ chief economist Warren Hogan said the result was disappointing and came after a weak set of economic growth figures earlier in the month.
"The key question now is whether this drop in confidence is sustained and slows consumer spending in the crucial Christmas shopping period," he said.
Mr Evans, who expects two interest rate cuts in 2015, said consumer spending was at the "heart and soul" of the economy because businesses would not increase their employment and investment until they saw a sustained lift in demand.
The Reserve Bank's minutes from its December 2 board meeting were released on Tuesday, but were somewhat dated by the weak national accounts released on December 3.
Even so, the minutes again raised concerns over the level of the Australian dollar when commodity prices have suffered significant declines.
In a more recent interview, RBA governor Glenn Stevens said he would prefer to see the currency at 75 US cents, rather than above 80 cents.
"I think they'll find it difficult to get the Australian dollar down and that will be a key factor in his decision to cut rates next year," Mr Evans said.
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