Premature relief from the consumer boom

Article Abstract:

United Kingdom retail spending is thought to have slowed its growth rate in Aug 1997, which means that interest rates are less likely to be raised. Windfalls are likely to have increased spending by 2 billion pounds sterling, in line with economists' predictions. There is still concern that rising employment, wages and stock prices could push up consumer spending enough for interest rates to have to be raised to 8%. Optimists argue that the danger of an overheated economy is less than in the late 1980s for a number of reasons such as lower house price inflation and less job security in 1997.

Personal Consumption Expend

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Searching for the consumer boom

Article Abstract:

United Kingdom consumption levels appear flat, judging by retail sales, but this could be misleading. Many consumers will receive windfall bonuses from demutualizations, and much of this could be spent on foreign holidays and automobiles which do not appear in statistics for retail sales. A higher proportion of windfall gains could be spent than forecast and the government may not have accurate data on consumption in time to prevent inflationary pressure from accumulating. There could still be an increase in consumption without inflation increasing if there is enough capacity.

Prices, Inflation (Finance), Inflation (Economics)

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In search of the consumer boom

Article Abstract:

There is concern that a UK consumer boom is under way and interest rates will have to be raised after the 1997 election, in order to curb inflation. The savings ratio is higher than in the late 1980s, and the housing market is weaker. Real estate transactions are lower in number than at the end of the 1980s and mortgage lending is not growing as fast in 1997 as it was in 1996. A boom could still be emerging as unemployment drops, earnings rise and windfalls are due to be received from building societies.

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