The real GDP growth rate declined substantially in the April-June quarter and was minus 1.6 percent in the July-September quarter on an annualized quarter-on-quarter basis (Chart 1). However, as an underlying trend, a virtuous cycle in which an increase in households’ and firms’ incomes leads to an increase in their spending seems to be operating firmly.
First, with regard to the household sector, labor market conditions have been improving steadily, as seen in the unemployment rate declining to around 3.5 percent, which is roughly the same level as the structural unemployment rate (Chart 2). In this situation, the rate of increase in wages has climbed moderately, registering around 1 percent (Chart 3).