In the top chart, we can see that consumption growth remains positive, so broadly households are experiencing improved quality of life. Household disposable incomes continues to slow, but this has not yet flowed directly into a drop in consumption growth. How can this be? It appears that people are saving less (see second chart). This is likely because they feel they can afford to save less as, on average, households feel wealthier (see third chart). This is largely due to house prices being strong but also because of rising share markets.
Overall Australian households are travelling ok but this is largely because of wealth effects rather than higher incomes. This leaves Australian households, an important part of the economy, vulnerable to a correction in asset markets.