It's now clear why retailers have been complaining about poor sales - Aussies bit the bullet and stopped spending. Every week we hear of more well-known retailers closing down - yesterday it was Colorado and others like popular bookshop Angus and Robertson have also gone to the wall. Never before have we been so frugal. The Bureau of Statistics figures show that last year we saved $74 billion which is around $3,300 for every man, woman and child. Last time I looked, we were drowning in credit card debt so this is very good news.
But not all the money is in bank accounts, most of it went on reducing debt - paying more off the mortage, getting the credit card balance down and striving to get that personal loan paid off. In 2008 and 2009, when interest rates fell, almost half of Australian mortgage holders opted to keep repaying their loan at the same level to pay it off faster, rather than spend the difference.
A Commonwealth Bank spokesman said the increase in household savings was the result of a deliberate strategy by the Reserve Bank to make it tough on households by putting up interest rates.
''The mining boom is like a runaway freight train that's coming down the track and there's nothing the Reserve Bank can do to stop it,'' he said. ''The only thing it can do is clear the tracks and get everyone out of the way.''
Not a good time to be in retail.