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Irivine reviews bank lending patterns, interest rate history and Australians' spending since the early 2000s and notes that consumer spending statistics contained a significant proportion of debt. She gives cogent reasons why these spending patterns will not be repeated in the current and near future.
The bottom line for retailers is that they must get used to permanently lower sales growth. This is bad news for shareholders and bad news for retail employees.
But for the economy as a whole, this deleveraging by households is a good thing. It's something households across the rest of the developed world are desperately trying to achieve but that only we have the ability to do effectively, thanks to the income boost from the mining boom. The Reserve Bank is happy to see some weakness in retail spending to make room for increased spending by businesses in the mining sector.
And if households can reduce their debts and build a buffer for future international financial turbulence, that is no bad thing
