Recent statistics indicate that households are ramping up the number of goods and services they are buying. With debt levels still elevated and the spectre of the Global Financial Crisis still fresh in our minds is this a cause for concern? Gareth Kiernan indicates that perhaps current spending behaviour is more ‘sustainable’ than meets the eye for two reasons (Infometrics link): Price growth has been weak (holding down the increase in the value of spending) and ‘quality adjustment’ has been substantial.
So although growth in the total value of household spending has picked up over the last year, it is not out of line with historical norms – unlike growth in the volume of spending. In simple terms, consumers have been able to purchase more goods and services without having to stump up more cash.