It may not be entirely coincidental that that period is when the terms of trade really began to rise in earnest. Yet from about the end of 2007, even as income was speeding up, household consumption spending slowed down. In per capita terms, real consumption today is no higher than three years ago.
It’s no wonder that people are talking about consumer caution, and no wonder that retailers are finding things very tough indeed. Coming after a period in which real consumption had risen by 2.8 per cent a year for a decade, and had outpaced income growth for two decades, no net growth in consumption for three years is quite a big change.