Treasurer Scott Morrison has appealed to the media not to be alarmist in the wake of news showing confidence fell from 101.3 to just 97.3 in December on a scale where 100 means optimists balance out pessimists.

The monthly Westpac-Melbourne Institute survey was conducted last week as Mr Morrison announced that the economy shrank in the September quarter, ending five years of continuous growth.

"The news is a jolt to stability and confidence," said Westpac chief economist Bill Evans. "Over the last six months, the index has held in narrow range between 99.1 and 102.4, and has generally held above 100."

"The reading of 97.3 means there is now a clear majority of pessimists over optimists, with the index down 3.5 per cent over this time last year in the lead-up to Christmas 2015."

The proportion of those surveyed believing their family finances were improving slipped 2 per cent, the proportion believing the economy was improving slipped 5 per cent and the proportion believing the economy would improve over the next five years slipped 2.5 per cent.

Asked whether now was the right time to buy a major household item, only 34 per cent said yes, down from 40 per cent in November and 42 per cent in the lead-up to Christmas 2015.

Victorian consumers are only slightly more pessimistic than NSW consumers but were previously much more optimistic. The NSW consumer index stood at 101.1 in December, down from 101.9 a year ago. The Victorian index plunged from 106.8 to 98.2.

"Every three months, we ask respondents about their recall of news," Dr Evans said. "For this survey, the most recalled items involved economic conditions with one in four respondents recalling news on economics compared to one in five in September. Since September respondents reported significantly less favourable assessments with positive impressions down 17 per cent."

Assessments of employment were down 15 per cent and assessments of interest rates down 42 per cent. Updated employment figures are due on Thursday.

"Respondents were aware that the Australian economy contracted in the September quarter, although because the media, quite appropriately in my view, chose not to raise any 'recession' scares, the impact on confidence seems to have been relatively modest."

"Consumers are also are aware that banks have been raising some interest rates and that official data on the labour market continues to disappoint."

Russell Zimmerman, executive director of the Australian Retailers Association, said the confidence figures did not match what he was hearing from his members.

"The retailers I speak to say things are bubbling along nicely - not booming but going well," he said.

The latest retail figures showed sales up 3.5 per cent in the year to October, with categories such as fast food soaring by 12 per cent. Department store sales are down 4 per cent.

"It's not the sign of an economy in trouble," Mr Zimmerman said. "If people were doing it so terribly tough you wouldn't expect people to be flocking to services like Uber Eats and Deliveroo."

Mr Morrison cautioned against alarmism, saying: "As Bill Evans from Westpac has pointed out, the media should not be using the latest GDP result to scare consumers.

"I continue to be an optimist and the latest retail sales figures we saw for October point in that direction."

Mr Zimmerman said retail stores were on track to exceed their target of $48.1 billion in sales in the six weeks before Christmas.

Dominique Lamb of the National Retail Association said she understand talk of a recession has caused some concern but she was "not seeing that flow through".

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