Rising housing wealth may encourage households to spend a larger share of their incomes. But we expect income growth to weaken again as jobs growth slows and rising unemployment keeps a lid on wage growth. The upshot is that consumption growth may remain a muted 1.5% this year before picking up to 2.5% in 2021. That would mark the second consecutive year in which spending per person stagnates and may yet encourage the RBA to cut interest rates to 0.25%.
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