, recreation and culture is up by 7 per cent, hotels cafes and restaurants is up by over 6 per cent, and consumption of transportation services is up by well over ten per cent. these outcomes suggest that although households are saving a higher share of their income than in the past couple of decades, they have also been prepared to increase their spending on services quite significantly. exactly why this is so is difficult to pin down. one can ’ t completely rule out the possibility that spending on some goods is being understated due to increased internet purchases from foreign retailers, although this is unlikely to be a particularly large part of the story. another explanation is that there has been a gradual shift in household preferences away from goods and towards “ experiences ”. this would be consistent with the strong growth in spending on recreational activities that has occurred over recent times. a more important factor though is likely to have been the strong growth in household income. over the past year, aggregate household disposable income is up by around 7½ per cent, and this has boosted spending on those services that are quite sensitive to income growth. this increasing importance of consumption of services in australia poses a challenge in tracking overall growth in consumption in real time. the main high - frequency data that we have is on the consumption of goods. australia has long had a comprehensive retail trade survey that is published on a monthly basis by the abs, with this survey reporting separate results for various types of retail establishments. but the spending measured in this survey currently accounts for only about one third of total consumption, and this is down from around 40 per cent in the early 1980s. unfortunately, for most services there are few timely and comprehensive measures of spending. there are, however, a number of high - frequency indicators that the bank tracks that provide some insight into this part of the economy. to take just one example, there are a variety of monthly indicators of spending on transportation including : the number of litres of petrol sold ; the number of domestic flights ; the number of international flights ; and the bis central bankers ’ speeches number of passengers on certain public transport networks ( graph 11 ). over recent times, the data on international flights, in particular, have provided some timely insight into the relative strength of services consumption, with australians travelling overseas in ever increasing numbers. graph 11 however, while these various partial indicators are useful, they fall well short of being a full substitute for comprehensive and timely measures of services consumption. the abs forward work program includes efforts to improve

spoken about earlier, 3 the famous rumsfeld quote very much applies to the financial crisis. risk is very much about the “ known unknowns ” but uncertainty is about the “ unknown unknowns ”. but maybe mark twain puts it a lot better : “ it ain ’ t what you don ’ t know that gets you into trouble. it ’ s what you know for sure that just ain ’ t so. ” financial institutions and investors knew that many assets in the financial system were badly mispriced. in the case of some financial institutions, they knew about the mispricing on their own books and rightly assumed that the same was probably going on with their competitors. but they didn ’ t know how much. they did not know what exposure various financial institutions had to these mispriced assets. so what is termed “ counterparty risk aversion ” became all pervasive. the lack of trust meant that financial institutions were only willing to lend to one another for increasingly shorter periods, ultimately only overnight. a financial markets version of the bank run portrayed in it ’ s a wonderful life took place. in the uk, in the case of northern rock, a traditional bank run occurred as depositors became concerned about the safety of their savings. they no longer trusted the institution because they were uncertain about its ability to fund itself, given its reliance on mortgage - backed securities for funding – a market that was no longer functioning at all because of a lack of trust in the value of these securities. this breakdown in trust led to a breakdown in intermediation. central banks stepped into this hole to play their historical role of intermediary of last resort. central banks can replace, to a reasonable extent, the decline in the intermediation of funds by the banking sector. but it is considerably more difficult for central banks to replace the lost trust. the extent to which central banks have needed to be intermediary of last resort is evident in the vast size of central bank balance sheets in major advanced economies : the euro area, the united states, japan and also the uk. the central banks are standing between financial institutions that are unwilling to lend directly to each other. the euro area provides a particularly clear example of this. in the second half of 2011, banks in the euro area became increasingly unwilling to lend to each other. first of all, banks would only lend against collateral ( secured lending ) rather than lending directly to another bank debelle g ( 2010 ), “