Midway through last week many finance journos, including yours truly, started hyperventilating when the official September quarter gross domestic product (GDP) data came out.

That's because it was a shock. It was negative. In fact it was quite a bit negative, at minus 0.5 per cent.

Ok "hyperventilating" might be a bit too strong a word, but I for one found my heart rate creeping up quite a bit - for good reason too.

Australia has only produced a handful of negative GDP "reads" over the past quarter century. The economy literally contracted in the three months to September. It produced less. It was weird.

Most Australians economists, however, will tell you we are not in recession. They're quite right too. We're not.

To experience a technical recession, an economy needs to suffer at least two consecutive negative quarters of GDP (or total economic output).

What really struck me though, as I started talking to a seemingly endless line-up of Australia's top economists over the hours that followed the data release, was one comment in particular.

'It doesn't feel like a recession'

I won't name him because he's an exceptional economic mind, but one of Australia's leading number crunchers said, "I know the numbers say we're close to a recession, but it certainly doesn't feel like one!"

I can understand that this economist may not "feel" a recession in the making, or anything close to an economic decline.

Indeed, his income is considerably higher than average, as would be the take-home pay of many of his colleagues.

Quite a number of Sydney and Melbourne city workers, who own their own home and have stable, well-paid jobs, are currently experiencing quite buoyant economic times. Nothing wrong with that by the way.

The story elsewhere, however, is far from rosy.

The 'other' reality

The reality is that many Australians are suffering financially. Personal debt is around 125 per cent of GDP (it's been increasing steadily since July 2013 when it was 113 per cent).

Meanwhile, unemployment rates in once-booming mining towns are among the highest in the country.

That's a nasty combination for many Australians. A mining recruitment consultant told me recently there's real mortgage stress in Perth, for example. Other mining sector-exposed centres have similar stories.

So what's going on? Why do some claim Australia is doing just fine, while others are drowning in debt and job insecurity?

One explanation is that the economic transition that's currently underway (from mining boom to broader economic growth) is faltering a little, but there are other problems at play here.

Let's look at what I like to call the economy's "exposed nerves". These are the areas of the economy that can, and are, causing ordinary folk real pain.

Low inflation

Australia currently has an inflation rate of 1.3 per cent. While that's good news because it means prices aren't rising too steeply in the economy, the inflation figure also includes wages. Wages growth, as many who have recently asked for a pay rise would know, is at record lows.

It can be a vicious cycle. Lower wages often lead consumers to tighten their purse strings, which can lead to lower economic growth, which in turn means wages don't rise.

I can't really see anything on the horizon that will lift wages significantly.

Anecdotally, I can tell you that university lecturers are warning graduates that it may take some time for them to find work, and that settling for an internship (no pay) or something less secure might be a better option for a while.

I understand the final year of Architecture at the University of Technology, Sydney, currently has an overflow of around 100 students. The same is also true for many law courses.

Trend to part-time and casual employment

Based on the last official employment data we know that employment growth is trending down. For some months now we've seen a move away from employing Australians on a full-time basis, to employing them on a casual or part-time basis.

A firm in the Sutherland Shire of Sydney, that specialises in placing part-time workers tells me business is booming.

This sort of work is great for those who are only looking for part-time work, or a looking for a neat way to re-enter the workforce, but too many Australians are being forced into this type of employment, and it can make it harder to eventually land a full-time role.

I experienced employment discrimination very early in my career when I was applying for a full-time job, after a leaving a part-time role.

The interviewer was confused as to why I would work part-time. Australia was only just recovering from the tech-bust at the time, and part-time work was all I could find. The employer didn't believe me. I sensed he thought I lacked ambition.

Reluctance on the part of consumers to spend

The services sector makes a sizeable portion of a key component of GDP (consumer spending). Many economists told me last week they couldn't explain why the consumer was reluctant to spend. I suspect it's because of the reasons mentioned above.

Added to that could be a perception that the housing market is reaching its peak, and consumers may not feel as if their overall wealth is growing anymore.

Whichever way you cut it, consumers aren't heading to the stores as much, and that's expected to be reflected in the Christmas spending figures this year, according to accounting firm Deloitte.

Weak business investment

Much of the economy's weakness stems from timid business decision makers.

This has actually been a problem since the global financial crisis. Businesses aren't confident the economy is on a sustainable growth path.

Urbis economist, Nicki Hutley, told me it's because corporate faith in the legislative process down in Canberra (that could produce economic reform) has largely evaporated.

Exports

The "external sector", as it's sometimes referred to, is quite difficult to analyse.

Suffice to say that the recent run-up in commodities prices is not expected to last.

Volumes may improve, however, which could be a life-saver for the economy.

What can the grown-ups do?

Many economists argue that monetary policy, or interest rate policy, has run its course. Any future rate cuts, they argue, will be like pushing on a string.

That leaves fiscal policy - the government.

Unfortunately, the federal budget remains in a "structural deficit", which simply means the budget has found itself in a black hole (where spending consistently exceeds revenue).

That needs to improve in order to give policymakers some proper fuel for the economy.

However, fixing a structural deficit normally involves "austerity" measures and cutting back. That means enduring lower standards of living for a while.

Do you see where I'm going with this? Interest rates are already at record lows and, without serious budget repair, the Government isn't in a position to provide the economy with the stimulus it needs to get back on track.

Meanwhile, Australians are finding it harder to land full-time work, and wages are stuck in a funk.

Where it hurts

The bottom line is that the main policy instrument that was used to raise living standards and growth was lowering interest rates, but it only seems to have aided property investors and those who already own a home in Australia's east coast capital cities.

Those Australians don't necessarily see the looming threat of a recession.

Low interest rates, however, have not been able to lift many towns in Western Australia, the Norther Territory or South Australia out of the economic malaise they're currently experiencing.

Now, while I understand Australia isn't yet officially in recession, I suspect the large number of Australians who are underemployed, who don't own a home and are facing rising costs as we approach Christmas would certainly feel like they're going backwards.