While high household debt remains a risk to economic stability, consumer spending is also a source of stability, according to a major bank economist.
The Commonwealth Bank of Australias chief economist, Michael Blythe, has said that while high levels of household debt, especially at a time of subdued income growth, is a risk to economic activity, consumer spending is a source of stability and one of the least variable components of GDP growth.
The chief economist added that the decline in the household savings rate which is down to just 1 per cent of disposable income has allowed consumer spending to defy the poor income growth.
A recent analysis of the transactions of 2.5 million households by the Commonwealth Bank has found that spendin…
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