Last week’s weaker than expected data on retail sales and the drop in utilities production in February suggest that real consumption growth has started the year on a softer footing than initially believed. Nevertheless, the apparent weakness in consumption in recent months is hard to square with the fundamentals, other than perhaps the turmoil in financial markets earlier this year. But even there, the impact on consumer confidence was minimal and financial conditions have improved significantly since then. Meanwhile, employment gains have been healthy and real incomes have continued to grow at a decent clip. Accordingly, there are still plenty of reasons to believe that real consumption growth will rebound to around 3.0% annualised over the first half of the year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services