INSIGHT

Australians are saving more and spending less, and debit cards are becoming more popular.

It's a phenomenon the governor of the Reserve Bank has been talking about for a while, and new data released last week provides further evidence for it.

A report on consumer credit by the business statistics company Dun & Bradstreet shows expectations for household debt are at their lowest level in three years.

The results come from a national survey of 1218 respondents aged 18 to 64. Conducted online by Newspoll in January, it anticipates the March 2013 quarter.

It shows just 18 per cent of respondents expect their household debt to increase in the March quarter, down from 22 per cent in the previous quarter.

As the survey's authors point out, this is likely to have a bearing on consumption.

"This attitude towards spending, especially on discretionary items, can have a negative knock-on effect for Australian businesses; something that has been revealed in the latest Bureau of Statistics retail figures, which showed only modest activity, and also in the lower sales expectations from our recent business expectations survey."

Economists keep abreast of consumers' expectations of things such as spending and saving because expectations play a large role in the economic theory of consumption.

They are particularly interested in consumption because it is by far the largest component of gross domestic product. It has consistently remained between 50 per cent and 60 per cent of Australia's GDP for the past 10 years. In 2011, that figure was 54 per cent.

A former Gillard government economic adviser and now adviser to Dun & Bradstreet, Stephen Koukoulas, says this "cautious consumer" phenomenon is likely to dampen economic growth in the short term.

However, he says it bodes well for the medium term because it ensures consumers will be more secure in the event of an unforeseen economic slowdown.

"If there is no slowdown in the next year or two, the current financial circumstances of consumers suggest they will be well placed to underpin ongoing strong growth in consumption and other spending," Koukoulas says.

So while economists disagree about the need for the RBA to keep cutting rates, it seems households are determined to steadily repair their finances — one quarter at a time.