WHAT a cautious bunch we've become! There are more of us working than ever before, we are generally optimistic about the future, the economy is relatively firm, as is our housing market - but are we out there spending? Absolutely not.

When it comes to our spare cash, we are using it to pay down debt at a rate that is the highest in the world, according to Reserve Bank assistant governor Philip Lowe.

The Australian Bureau of Statistics says we are saving about 10 per cent of household income, double the level in the US.


To put this in perspective, through the 1990s and early 2000s we were spending more than we earned.

You would think it was Australia struggling economically rather than the US or parts of the European Union.

While every economist around the country will be applauding our new-found austerity - and if we continue to save at the rate we are, it will keep interest rates lower, so bravo for that - the retail industry is tearing its hair out.

We are heading into the all-important Christmas trading period and there is still no sign we might open our wallets any time soon, according to Australian National Retailers Association chief executive Margy Osmond.

She is already predicting the post-Christmas sales will be the sales to end all sales as retailers offload the extra stock they bought in anticipation of a big Christmas spend - and then couldn't sell before the big day.

''It's a great time to be a shopper,'' she says. ''There are constant sales, constant discounting and constant eating at retail margins, and I can't see an end in sight to it. Last Christmas was fairly flat and it looks like this year is going to be pretty much the same - I expect the Boxing Day and post-Christmas sales to be absolute boomers.''

Mrs Osmond believes we are seeing a material change in the attitude of the Australian consumer.

''It used to be that if you had a job and money in the bank, you would say, 'let's spend it!'

''These days, people are saying, 'I have a job but I'm worried about my mortgage, I'm worried about my superannuation, so I'm going to save more, pay down my debts and be careful when I do spend.' ''

CommSec chief economist Craig James agrees. ''It seems like people are taking their health a little more seriously too. Tobacco spending is down, alcohol spending is down, but we are prepared to spend money on sporting and recreational services while rewarding ourselves for our discipline and cost-cutting with little luxuries such as shoes, sheets, pillows, digital cameras and short domestic flights and getaways.'' So the new fridge might be off but we are more prepared to, say, eat out at a cafe or take a trip interstate. Interestingly too, says Mr James, we have been dumping the car and taking public transport, as reflected in a record 5.2 per cent fall in petrol consumption in the September quarter (in inflation-adjusted terms compared with the prior September quarter) and a 15.9 per cent jump in spending on rail.

Macquarie Bank senior economist Brian Redican says the jump in saving has not been across the board, and that it is the older, more wealthy people who may not have a mortgage who have been putting money away for their retirement.

That is because the additional money saved seems to have come from share dividends and reduced spending on healthcare.

Deutsche Bank senior economist Phil O'Donaghoe questions this 10 per cent saving figure on the basis it is double the savings rate in the US, yet our unemployment rate is half that in the US and our economy is travelling much better.

<<If things were so good, would people not be opening their wallets?. >>
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Things are not so good. Ask the people on the street, they will tell you so. There is no security for the future, as far as jobs and superannuation go. The general public are feeling the pinch, with rising costs of everything and no extra income to cover it. Look at Europe and the riots for these very reasons. We are not immune, don't believe everything you are told, especially if the government tells you.      

Maybe people are waiting for another free handout from the ALP.