December's retail sales and consumer price reports together suggest that real consumption growth accelerated to 3.8% annualised in the fourth quarter, from 2.4% in the third. If our calculations are correct, that would be the strongest quarterly growth in consumption for four years. We are still skeptical that this faster pace of growth can be sustained beyond the first quarter, however, even after allowing for the reduction in payroll taxes at the start of this year.
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