Slow Consumer Spending May Trigger Recession.
The Office for National Statistics has released its latest figures on consumer spending and it shows that consuming spending had slumped to just a 0.1% increase in the 2nd quarter of 2017. This is the slowest growth rate for 3 years.
What does this mean?
It means we are all feeling the squeeze. Inflation is up, CPI at 2.6% pa and RPI at 3.6% pa yet wage inflation is going the other way, with a fall in real wages for the 2nd quarter 2017 by -0.5%pa.
Prices up, wages down, means we have less availability money to spend.
This may push the economy into recession if the trend continues.
It may also mean that the Bank of England holds back on interest rates increases.
This will further weaken the pound meaning FTSE 100 companies may do letter as overseas profits are converted to a weaker sterling, meaning more profits and more demand. It will also mean you holiday money will not stretch as far and imported goods and services (which included our food – UK is a net importer of food) will go up.
A vicious circle