We have argued for some time that the consumer recovery, which was the main driver of growth in 2015, would slow this year. Last week brought further evidence that this process is underway.
Declining consumer confidence and signs that the labour market recovery might be losing steam will weigh on consumer spending in the near-term. And inflation should pick up later this year, causing real income growth to slow. As a result, we think that the consumer sector will contribute to a decline in GDP growth in 2016.
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