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CANBERRA - There is an underlying hint of desperation in the Christmas decorations that are starting to appear in shopping malls across Australia.
With confidence plunging in line with the world's sharemarkets, household budgets stretched to breaking point and unsettling news on employment, the nation is in no mood yet to start opening purses for the traditional yuletide splurge.
Quite the opposite: cafes and restaurants are noticing a fall in trade as customers eat at home; retailers are cutting back on hours and staff as business slows; and, increasingly, service stations are beginning to demand cash in advance for petrol as more cars race off without paying.
No one doubts Prime Minister Kevin Rudd when he says that Australia's banks are in good shape, and most economists agree that economic fundamentals are still sound.
But there is an awareness that the niggling signs of trouble are being masked by the resources boom that continues to buoy the economy.
Rudd and Treasurer Wayne Swan have been working hard to reassure Australians. Rudd's first major initiative was the decision to bring forward the start of spending under the A$20 billion ($22.3 billion) infrastructure fund announced in the May Budget, with the intent of priming the economic pump with a hefty injection of taxpayers' money.
This money will be allocated to projects that will either unblock choke-points in ports, roads and rail, or provide facilities needed to take advantage of resources. It will also boost industry, commerce and employment.
Wisely, in the view of many economists, Rudd rejected a push by the states for an additional A$23 billion in federal funds.
Rudd announced that Canberra would guarantee all bank deposits and the international borrowings of the nation's banks, and bolster the mortgage market by spending an additional A$4 billion in residential mortgage-backed securities.
Battered by what is now the worst drought on record, hammered by soaring grocery bills and under intense mortgage pressure despite recent interest rate reductions, suburban Australia is hurting.
Alarmed further by headlines reporting the massive hits local sharemarkets are taking from the global financial tsunami, they are battening down the hatches - in turn hurting business and the economy in a cycle that, if unchecked, could become a dangerous downward spiral.
Market researcher Roy Morgan has reported a large fall in its consumer confidence rating, with most convinced this is not a good time to buy major household items and the majority expecting rough financial times.
"This is a worrying sign for the Australian economy," Morgan chief Gary Morgan said. "If Australian consumers stop spending, the economy is certain to enter a recession."
The latest Westpac-Melbourne Institute index of consumer sentiment held similar fears. It fell by 11 per cent in the past month, hovering only slightly above the 16-year lows it reached in July when consumers were being pounded by rising interest rates and petrol prices.
Gloom was recorded across family finances, the outlook for economic conditions over the next 12 months, and on whether this was a good or bad time to buy a major household item - which crashed by almost 20 per cent.
A survey by Monash University's Australian Centre of Retail Studies has confirmed these findings and anecdotal evidence in the malls.
It found that 75 per cent of respondents were eating at home rather than at restaurants, 73 per cent were spending less on leisure and entertainment, most were scouting for specials and shopping at discount centres in a bid to cut household bills, and 67 per cent said Australia was moving into "uncertain times".
Growing job uncertainty is also deterring spending, with the Reserve Bank forecasting a slowdown in growth that would increase unemployment by about 1 per cent.
The latest ANZ survey of job advertisements yesterday reported that ads in major newspapers and on the internet fell in September for the fifth consecutive month.
And among the tinsel and Santa's caves being installed in shopping malls, the Salvation Army added this grim prediction for Christmas: more than 300,000 people will be banging on its doors looking for help this holiday season.
