A household spending slowdown is squeezing the economy

A fall in the value of retail sales suggests a sharp decline in household spending, with real GDP set to contract for the first time since March 2011. The RBA should seriously consider a rate cut to give consumers a boost.

Household spending has slowed significantly over the past few months and, with declining real wages and budget cuts weighing on the household budget, I expect spending to be fairly soft over the remainder of the year.

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