This sort of thing only compounds the fog of economic war at a time of crisis. It is true that economic predictions are a dime a dozen and at best indicative the further they’re projected forward in time. Media savvy ex-Treasury boffins in Access Economics were warning of runaway inflation this time last year. This year, they’re worried that we’re “buggered”. (And they’ve always got some neato right wing policy prescription to go with the diagnosis.)

But at a time when the tectonic plates of the economy are shifting rapidly, it is essential to have access to good data. Nobody seems willing to credit Treasury modelling anymore, so with Rudd’s pre-Christmas stimulus package, we were treated to prediction by anecdote. And, all of a sudden, Gerry Norman, retailer Harvey Norman’s boss, was some sort of folk wisdom personified.

Apparently, he still is. In his column today, Peter Martin explains why deflation is a *bad thing*. He traces a scenario where consumer expectations of price discounting lead to the deferral of discretionary purchases, which then creates a vicious cycle.

Rather than keep cutting prices, retailer Gerry Harvey has begun shutting stores. Others will follow if deflation takes hold, and the resulting unemployment will make even the majority of us who keep our jobs still more wary about buying, pushing prices down further and pushing more of us out of work.

I was actually in one of Gerry’s emporia yesterday – because my dvd player died on the long weekend. (I don’t know whether a dvd player is a “non-essential purchase”, and maybe there’s more precision needed in defining exactly what that means.) I’m not flush with cash at the moment, but I did consider purchasing an all in one LCD tv, and had my eye on a Grundig with a 22c screen which had been knocked down to $749. But I decided to defer the said purchase, figuring such items would later come down in price, and my search for a cheapo dvd player actually took me to David Jones, of all places, where they were less expensive than at Harvey Norman.

So perhaps I am creating unemployment. Or something.

I’m actually highly sceptical about the value of using Harvey Norman’s supposed travails and competitive strategy as a parable for the economy as a whole, or even for consumer behaviour. How important are computers and tvs and gadgets as a component of the retail sector and of retail spending as a whole? How usual was it in the past for people to defer purchases of big things like tvs and computers on the assumption that the price would come down – because often it has? What contribution does discretionary spending actually make to the economy and how is it defined?

In thinking about the economy’s plight, it doesn’t seem to me that anecdote, possibly self-serving pronouncements by retailers and argument by theoretical prediction go all that far. I’m certainly not to be read as suggesting that we should wait endlessly for perfect data before acting, but it might be nice if we were a little less unquestioning of the data we think we have, and how it was derived.

The stock market’s fall may also have had something to do with evidence of a growing deflation in consumer prices in America, or so opinionators opined. Well, I guess we don’t have the “inflation dragon” to kick around anymore.

And we’ve had another outpouring of deficit aversion, bipartisanship at last (!), in response to Glenn Steven’s expression of the belief that the government had a responsibility to “borrow to invest”.

And, yet, we’ve had a piece of prime silliness – to put alongside all these other signs of the times – in Crikey‘s editorial:

There’s not a lot politicians can do. The Government handing money to low income earners who’ll have virtually no choice but to spend it makes sense, but there’s only a limited number of times a $10b heart-starter can be administered to the economy. Even the Opposition has been doing its bit lately, prefacing virtually every statement on the economy with the mantra that Australia is best-placed to weather these difficulties.

And there’s not much businesses can do without demand. It’s actually up to us consumers to realise Australia’s economic fate is in our hands, and act accordingly.

Righteo. Hopefully there’ll be another Herringbone sale again soon and I’ll try to do my duty. The rent went up $200 a month – does that help?

But Crikey’s leader writer might like to think about household debt being at 160% of earnings at a time when – even if unemployment is yet to really hit home – the evidence is in that hours and overtime are being cut back all over the shop. And while the mortgage rate may be down, there’s been very little or no discernible movement in credit card rates – something Kevin Rudd acknowledged some time ago, and vaguely promised to look into now that consumer credit is to be regulated by the Commonwealth. If citizens – also known as consumers – are trying to do their own “deleveraging” and get their balance sheets back to something a little more realistic, I hardly think that’s a matter for the loud condemn. Or for that matter, people choosing not to buy more, well, stuff. Do you like stuff? You can never have enough stuff – apparently.

I’d much rather go with Glenn Stevens’ view and look to the government as investor and consumer of last resort.