the measurement of services consumption and the bank strongly supports these efforts. conclusion so in conclusion, there are significant changes in saving and spending patterns taking place in australia. the effects of these changes are probably most pronounced in the retail sector, with both increased saving and the switch towards services lessening growth in spending on goods. as a result, conditions are quite difficult for many retailers. the increased household saving is, however, a positive development from a national riskmanagement perspective. households are using some of their income growth to build up bigger financial buffers, and this should hold them in good stead in the uncertain world in which we live. these higher saving rates are likely to be quite persistent and they represent a return to more traditional patterns. while they partly reflect the ongoing adjustment to the earlier big run up in housing debt and housing prices, the evidence that i have talked about today suggests that there are also other factors at play. in particular, many households appear to have increased their saving in response to the decline in equity prices and an increase in uncertainty about the future. it is reasonable to expect that, at some point, the impact of these factors will begin to wane, although exactly when remains an open question. the reserve bank continues to monitor these trends very carefully, both at the national level and the micro level. over the period ahead, the way in which households respond to the global uncertainties and the continuing growth in their incomes will, no doubt, have an important bearing on developments in the australian economy. thank you. bis central bankers ’ speeches

concerned about losing their job. graph 7 here, the evidence is consistent with the idea that when people become more uncertain they save more to build up larger buffers against the possibility that something goes wrong later respondents are asked to rank their feeling about the statement “ i worry about the future of my job ” on a scale of one to seven ( strongly disagree to strongly agree ). households were classified as : “ less worried ” if their perceived job insecurity response decreased between 2006 and 2009 ; “ slightly more worried ” if their response increased by one step ; and “ a lot more worried ” if their response increased two or more steps. bis central bankers ’ speeches on. it is also consistent with earlier work at the reserve bank showing that households that are particularly uncertain about the future tend to spend less of any increase in income than do households that are more confident. 7 in summary, this work on savings using household level data confirms many of the popular explanations for the recent increase in savings. higher housing prices and debt levels have had an effect, as have falls in the prices of investment portfolios and a general increase in uncertainty. this work also confirms that the increase in saving has been widespread across the population. household spending i would now like to turn from saving to spending and look at the changes that have been taking place in household expenditure patterns. the two most comprehensive sources of data in this area are the quarterly national accounts and the household expenditure survey, which is currently conducted every six years by the abs. the latest survey took place in 2009 / 10 and was released just a couple of weeks ago. it covered almost 10, 000 households and classifies expenditure into over 600 individual categories, ranging from “ towels and face washers ” to “ road tolls ” to “ ten pin bowling charges ”. looking at the longer - term trends from both these sources, two changes stand out. graph 8 the first is the significant rise over time in the share of total expenditure on housing. when the household expenditure survey was conducted in the early 1980s, housing accounted for a little less than 13 per cent of total expenditure ( graph 8 ). by way of contrast, in the recent survey this share had increased to 18 per cent. this is the largest change in any single expenditure category. the bulk of this change took place over the past decade and largely reflects the rise in interest payments on mortgage debt due to higher levels of debt relative to income. see berger - thomson l, chung e and r mckibbin