Anxious consumers have blamed the government as they close their wallets, deepening Joe Hockey's challenge of crafting a budget hit by plummeting iron ore revenue and by Tony Abbott's need for political recovery over budget repair.
The halving of the iron ore spot price to just over US$50 a tonne over the past 12 months has wiped billions off the budget as part of an estimated annual $60 billion cut to the Australian economy.
With the budget reeling from that external shock, the latest NAB quarterly consumer anxiety index has, for the first time, put consumers' concerns over government policy higher than the usual pre-occupations with the cost of living and worries over job security.
"Government policy is now the single biggest cause of anxiety for consumers, just ahead of cost of living, while job security continues to cause the least stress," said NAB's group chief economist Alan Oster.
"What it basically says is that the consumer is still scared, that's basically the bottom line."
The bank has warned that the sense of anxiousness is prompting consumers to eschew "non-essential" spending in favour of either saving or paying off non-discretionary commitments such as utilities and medical bills.
Asked what concerns consumers identified and what they intended to spend on, Mr Oster said: "It's very much a picture of consumer who is doing what they have to do and who is not feeling happy."
Having adequate funds with which to retire has emerged as a major concern of many, along with fears over unplanned family expenses and rising medical bills.
With less than six weeks to the budget, the Treasurer is now confronting a triple whammy of negative impacts on the budget bottom line: desperately low revenue from iron ore exports; the prospect of falling domestic demand as shoppers close their wallets; and the need to fund tax cuts for small businesses and additional child-care assistance for families.
That new spending is a function of the government's political rather than economic focus at present as it tries to undo the almost fatal damage of its first hardline budget.
The NAB survey was taken over the period of late February through to early March, covering the intense uncertainty gripping Mr Abbott's leadership, as well as the lead-up to the recent NSW election.
Anxiety was highest in South Australia, however, where as a result of those same leadership ructions in Canberra, it became clear that potentially thousands of promised jobs in the submarine building industry might never materialise.
The nervousness comes as the iron ore price continues to slide, robbing the economy of colossal levels of economic activity and Canberra of vital revenue, with each $1 fall in the spot price taking up to $220 million out of revenue.
While Mr Hockey had criticised Labor treasurers for basing revenue projections on what he regarded as optimistic iron ore prices, he has now been hit by the same problem even after dialling in a "conservative" price - first at US$92 in last year's budget and then at US$63 in December's Mid-Year Economic and Fiscal Outlook.
"It's currently $63 and we are forecasting that it will remain around $60 a tonne for the foreseeable future," he said at the time.
"That more than 30 per cent fall in iron ore prices has had a big impact on the budget, as has a 15 per cent fall in thermal coal and a 20 per cent fall in wheat prices since the budget."
Mr Oster said demand from China - which accounts for half of global iron ore consumption - was lessening as the economy softened but also as it moved into a different kind of growth less dependent on steel.
As part of the fallout from that slump, a mining industry body known as the Magnetite Network, was shut down this week, with member companies electing to trim expenses in order to stay afloat.
The network had been formed six years ago to represent second tier producers, Citic Pacific, BC Iron, Atlas Iron, Asia Iron Australia and Karara Mining.
At US$51 a tonne, iron ore has reached its lowest spot price since the Steel Index began releasing spot prices in 2008 but at least one major bank now thinks it will bottom out at closer to US$47.
