Confidence among WA consumers has crashed on the back of job and cost of living worries - just as the State and Federal budgets face a hit from falling iron ore prices.
A Chamber of Commerce and Industry survey, out today, shows West Australians have become pessimistic in the face of job shedding by major companies.
Only 27 per cent of West Australians expect the State economy to improve in the coming year. Three months ago, about half of those surveyed were upbeat about WA's economic future.
High living costs were named by 51 per cent of those quizzed as a key factor in their concerns.
The state of the domestic economy, personal finances, the jobs market and political environment at a State and Federal level were all named as problems.
CCI chief economist John Nicolaou said almost a quarter of people believed their job prospects had deteriorated. He said high-profile job cutbacks at companies such as Toyota and Qantas had fed pessimism.
There is growing pessimism surrounding the iron ore sector, with prices falling almost 25 per cent in the past three months to be at their lowest since mid-2012.
The sharp fall will hit the State Budget, which is 20 per cent financed by iron ore royalties. At the mid-year update, the Budget assumed iron ore to average $US120 a tonne. It is now at $US104.70.
The fall is because of concerns about the Chinese economy and its demand for steel, particularly with authorities trying to cut pollution levels from steel mills in the country's north.
Not only will a falling ore price hit the State Budget but it will affect the total profits of major Federal taxpayers such as BHP Billiton and Rio Tinto.
The State Budget's revenue flows move up or down $45 million for every $1 change in the price of iron ore. There may be signs the non-mining sector of the WA economy is about to pick up, with finance and IT firms set to increase hiring in coming months.