Real personal disposable income growth slowed to a snail pace during the first half of this year, depressing consumer spending in the process. Compared to a year ago, second-quarter real income actually declined. Thankfully, consumer prices are not rising as fast this quarter. The key question now, though, is how strong nominal income will grow this quarter and next. The pick-up in hours worked suggests respectable income growth of around 5% annualised this quarter. Whether or not this strength will persist, however, remains unclear. Judging by the trend in employment and growing external headwinds, we have our doubts.
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