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Household Spending & Labour Cash Earnings (Sep.)

The surge in household spending in September adds to the evidence of a last-minute spending spree ahead of October’s sales tax hike. While that raises the chances of a deep slump in the following months, we feel comfortable with our forecast of a 1.7% q/q drop in consumption in Q4. Meanwhile, wage growth picked up in September and should remain around current levels even as unemployment rises further.

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