Saving predicted
PA Wellington People are more likely to save the extra cash they get from personal income tax cuts introduced on October 1 than to spend it, according to an economist with DFC New Zealand, Ltd, Mr Roger Garrett. Unprecedented real interest rates of around 8 per cent meant people were more likely to replenish savings as a safety net against recession and unemployment, or to reduce debt, than to spend or invest in riskier areas such as the sharemarket, he said in a fortnightly newsletter. Although retailers were likely to get minimal benefit from higher disposable incomes, it was difficult to gauge the effect on household spending patterns of higher inflationary expectations resulting from a falling New Zealand dollar, the wage round and a belief that GST may be increased, Mr Garrett said. But businesses looking to the tax cuts for signs of a rejuvenated consumer were likely to be disappointed.
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Press, 6 October 1988, Page 5
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153Saving predicted Press, 6 October 1988, Page 5
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