Abstracting from the effects of the snow in Q1, the big picture remains one of very feeble consumer spending. But things are starting to look up. CPI inflation now appears to be on a firm downward trajectory. And there have been clearer signs of a revival in nominal pay growth. Admittedly, there is no guarantee that any extra income that households have at their disposal will be spent. But with consumer confidence still fairly high by past standards, we don’t think that consumers are about to significantly ramp up their savings. Overall, we expect consumer spending growth to pick back up from 1.1% in Q1 – its lowest since Q1 2012 – to about 2% in early 2019, allowing the economy to re-gain some momentum.
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