Our pessimism in the face of healthy economic numbers has been puzzling. Why are we so crestfallen? I think that golden economic phase from about 1995 to 2007 has contributed to our discontent. The expectations it raised - including rising house prices - have spoilt us. Economists labelled that period "the great moderation" because of the long period of economic stability that followed a lasting shift to low interest rates and financial deregulation. But the behaviour of consumers during the great moderation was far from moderate. Encouraged by cheap money we piled into property. In the early 2000s about one in every 12 homes was changing hands each year - more than double the rate in the early 1990s. Between 1996 and 2004 Sydney's median house price rose by 160 per cent.

The property market wasn't the only abnormality. Consumers loosened the purse strings and started to spend more than they earned - year after year. As a result, Australia's combined household savings quickly evaporated and we went collectively into the red. Employment grew faster than the labour force, driving the jobless rate to levels many economists once thought were implausible. The economy - now apparently bulletproof - expanded faster than average. As unemployment fell to historic lows, traditional economic risks seemed to vanish. Firms went out of their way to hold onto staff and those who lost jobs found it relatively easy to find a new one. The rate of loan repayment arrears fell to negligible levels. If financial difficulty struck, rising house prices made it easy to sell your house and get more back than you owed. Even if borrowers got into trouble they were covered by collateral. And of course investors got used to strong returns from both property and sharemarkets. Meanwhile, the strong economic activity bolstered government coffers, allowing politicians to shower households with public largesse. Personal tax cuts became an annual event and handouts to families were regularly upgraded. The global financial crisis intervened in 2008 and another process of structural change - caused by the mining boom - became interposed with the "great moderation".

The timing of the mining boom helped cushion Australia from the financial crisis and make a relatively trouble-free transition from the "great moderation''. Many key economic indicators have settled back into a more traditional pattern - growth in consumer spending is more aligned with income growth, employment growth more aligned with population growth and asset price growth more aligned with household income growth. Now about one in 25 houses change hands in a year - a similar rate to the pre-boom days of the early 1990s. But I suspect many people came to believe that the unusual economic conditions that prevailed between 1994 and 2007 were the real norm. The growing realisation that the current reality is likely to persist for some time is taking a toll. It's as if we're collectively asking ourselves: "Is that it?" The great moderation has been followed by great disappointment. Consumers aren't the only ones finding it hard to adjust. Governments are also struggling with the change.

The decade and a half before 2007 were especially good years for state coffers. The consumer spending frenzy drove super-strong growth in the states' GST while rapid turnover in the property market triggered a stamp duty bonanza. Strong employment growth was also positive for state payroll tax. For most of the 2000s state governments received significantly more revenue than they budgeted for. Even though their spending was also consistently higher than forecast, the states were able to announce budget surplus after budget surplus. But those days are gone. Key revenue sources are now growing much more slowly and state governments across the country are under budgetary pressure. There's also been a distinct shift at the federal level. The coffers were so healthy in the 2000s that first the Coalition and then Labor were together able to deliver eight tax cuts in a row. Major income tax cuts were offered by both major parties during the 2007 election campaign. But now personal tax rates hardly rate a mention and it's hard to see a big tax cut duel featuring in next year's poll. Both sides are under pressure to explain how they will deliver a budget surplus instead. The gradual realisation that the future will be different from the past could weigh on the public mood for some time yet. But eventually we'll have to accept that the "great moderation" between 1994 and 2007 was the exception and not the rule.

Ross Gittins is on leave. Follow the National Times on Twitter