Above-trend growth won’t be sustained

The savings rate bounced back in Q2 as consumption fell and remains above its pre-pandemic average, leaving scope for a renewed rise in spending over the coming quarters. And with inflation set to slow further, the largest falls in real household incomes are now behind us. Nonetheless, we expect consumer price gains to outpace income growth throughout 2024, which suggests that consumption growth will be mediocre. Accordingly, this year’s GDP growth spurt should be followed by a more pedestrian pace in 2024.