Consumer confidence fell sharply following the devastating February 22 Christchurch earthquake.
The latest Westpac McDermott Miller consumer confidence index, published today, fell 10.4 points from the December quarter to 97.9 in March. An index number under 100 indicates that pessimists outnumber optimists.
The latest survey was carried out from March 1 to 13. No Christchurch households were interviewed, with extra households added from the rest of Canterbury.
Westpac chief economist Brendan O'Donovan and senior economist Dominick Stephens said the clear driver of the fall was much more pessimism about the near term economic outlook.
The net percentage of households expecting bad economic times during the next year surged from 9.7 per cent in December to 46.5 per cent.
Economic expectations for five years' ahead also declined, but by much less, the Westpac economists said
Looking back on how their own financial situation had changed during the past year, households were slightly less negative than they were in December.
"The nation is clearly in shock, but time will tell whether this translates into much lower spending."
Historically, movements in households' economic outlook have been reasonably good harbingers of upswings and downswings in consumption growth, but not necessarily of their magnitude, the economists said.
Respondents to the survey also appeared to have increasingly accepted that the combined impact on their financial situation of last year's rise in GST and personal tax cuts would be broadly neutral. In the latest survey 40 per cent reported no change from the moves.