Sluggish wage growth will hit household budgets hard

A persistent decline in wages and rise in spare capacity suggest Australia's next recession will have fewer job losses than in the early '90s, but wage growth will be much weaker.

Real wages continued to decline in the June quarter, placing further strain on household budgets. As a result, household spending will remain subdued over the remainder of the year and house prices will come under increasing pressure.

With the outlook for wages subdued, inflationary pressures will moderate somewhat over the next few quarters, closing the door on any remaining support for a rate rise.


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