AUSTRALIA loves to tell a story about itself. That we have been very successful for a very long time - but that may be coming to an end.

The latest example is the Sydney based asset manager who has sold everything, citing a coming correction in property and sharemarkets.

“There are just too many risks at present,” said Altair Asset management’s Phillip Parker, this week. He described the asset cycle as “overvalued and dangerous”. (Although, as reported by the Australian Financial Review today, it’s unclear whether Mr Parker’s decision to close his funds was related to a legal dispute about his mother’s share portfolio.)

You hear this a lot: “Australia has gone for 25 years without a recession”. Whoever imparts this wisdom normally follows up by saying that doom and gloom is about to arrive.

You can expect to hear that combo again next week, because Australia’s economic growth figures are going to come out, and lots of people reckon they’ll be rubbish.

Growth of 0.1 per cent for the last three months is likely, getting a zero is somewhat likely, and negative growth is definitely on the table. So the old story about successful Australia being knocked off its perch will be doing the rounds again.

But the truth of the matter is a bit different to the story we like to tell. As you’ve probably noticed, the last 25 years haven’t been all tea, scones and sunny afternoons.

ONE AT A TIME PLEASE

At the national level, we have done well in the last 25 years, sure. But while Australia overall has been famously not having a recession, economies in various states have gone to heck more than once.

WA is the most recent example, with an economic bloodbath following the end of the mining boom. It was hard yakka for people trying to provide for their families, as unemployment shot up and businesses went broke. But that human misery doesn’t show up in the national economic statistics because the statistics average out over all the other states.

If the states take it in turns to have recessions, then we can make the national figures look good for a long time.

Australian states have very different economies. Some are more about mining, some do more agriculture, while some do more finance and insurance. This is a national strength. It is why we haven’t had a national recession. But for the actual people living in the actual states, a national recession is mostly an abstract accounting concept.

We all live in a local economy as well as the national economy. Whether or not the national accounts turn out positive is not so relevant when the businesses on the main street are all vacant.

A similar story can be told about house prices – while the national story is of rising house prices on average, that is far from true in some corners of Australia. We have had falling prices in WA and prices remaining stable in Tasmania for a long time.

TOUGHER THAN YOU THINK

What all this means is Australia is probably tougher than a lot of people give us credit for.

It is easy to imagine 25 years without a recession leaves us rich and spoiled and soft. The reality is that each state has been through a fair bit. In turn, parts of Australia have been tested and tried through tough economic times, and each time each state has come through.

The next bout of economic fever could hit all the states at once.

The big difference between a co-ordinated downturn and a one-at-a-time downturn is the federal government. Its books will turn especially sour if all of the state economies are collapsing at the same time. That won’t be easy.

But the good news is that Aussies themselves have proven time and again that they know how to go through a rough patch and come out the other side. So if our 25 year run of good numbers comes to an end, some of the panic will be overblown. It won’t be easy. But for a lot of Australia, it will seem all too familiar.

Jason Murphy is an economist. He publishes the blog Thomas The Thinkengine. Follow Jason on Twitter @Jasemurphy