Illustration: Simon Bosch Visiting US economist Paul Krugman this week warned of the dreaded "R" word. Former Reserve Bank board member Warwick McKibbin put the odds at 50:50 that we'll be in recession in the coming year. But now that the dust has settled, and with a bit more time to digest the literally hundreds of data points that make up the report, the chief economist of Commonwealth Bank, Michael Blythe, has penned an excellent note to clients laying out the case for being positive about the Australian economy. I reckon I've read 41 national account report cards in my decade or so of economic journalism. Blythe has read 121.

His conclusion? Yes, the report card was "soft". "But some of the more pessimistic interpretations placed on that weakness should be avoided." His reasons for optimism can be roughly distilled into 10 main points: 1. We're already near the bottom of the mining boom cliff Yes, commodity prices have tumbled, meaning we earn less for our mineral exports. And yes, mining companies have tightened their purse strings and stopped investing in new projects. But the collapse in spending on mining exploration in the June quarter means we're much closer to hitting rock bottom (pun intended). It's unlikely such a weak number will be repeated next quarter.

2. Storerooms are empty When measuring economic output, the Bureau of Statistics also takes into account whether companies are stockpiling or running down inventory. The national accounts reveal that the inventory to sales ratio is at a record low. "Future sales will need to be met by lifting production", says Blythe, which bodes well for future economic growth. 3. A home renovation boom is on its way

One consequence of sky high property prices is that the cost of moving is growing more quickly than the cost of staying put. Spending on home renovations is finally picking up after a period of weak growth. Renovations make up about 40 per cent of total residential construction activity and will help to offset any slowdown in new home construction. 4. Workers are getting pay cuts, not the sack In times of economic weakness, it's better if bosses have the flexibility to curb pay rises rather than sack workers outright. That appears to be happening. It's a good sign that Australia's labour market is flexible enough to respond to the deteriorating economic climate. Advocates of greater "flexibility" in the workplace take note. 5. We're becoming more internationally competitive

Sure, it sucks not to get a pay rise, but a knock on effect is that Australia's wage premium compared to the rest of the world is shrinking. Australia remains a high-wage, high-cost place to do business. But restrained wages growth and a lower dollar will make our exports more attractive. That increases the chances of another pay rise down the track. 6. The job market is holding up pretty well Tax data in the national accounts reveal payroll and pay-as-you-go tax receipts are growing at a "reasonable clip". Jobs figures released this week show the national jobless rate falling to 6.2 per cent. Don't believe it? The national accounts data suggest you should and "sits at odds with the doomsayers who want to say the ABS has got it wrong".

7. Households have amassed a war chest of savings Retailers have been moaning for some time now that Aussie consumers are reluctant to spend. But despite weaker wages growth, the national savings rate has soared since the GFC. We now save about 8 cents in every dollar we earn. That money is just sitting there waiting for the day we feel comfortable to spend again. And given the jobs market is holding up, that day may be getting closer. 8. We're spending less overseas

Better put that overseas holiday on ice as the Aussie dollar tests below $US70 cents again. That's bad news for your tan, but good news for the domestic economy as money not spent abroad is spent on domestic holidays and shopping. 9. You can't control the weather Economic report cards usually "seasonally adjust" to smooth out the impact of regular events, like the Christmas sales bonanza or the winter boom in spending on woolly socks. But some things are hard to predict. Turns out, good weather boosted resource exports in the first quarter of the year, earning some negative payback to growth in the June quarter. Again, that's unlikely to be repeated. 10. Growth will probably be revised up anyway

National account figures are a rough first draft of history. An analysis by the Reserve Bank of the last 15 years of data found "revisions to early estimates of GDP can be large and...have tended to increase measured output". For example, during the depths of the GFC the first release of September quarter national accounts found the economy grew just 0.1 per cent. The Bureau now puts growth in that quarter at 0.7 per cent. It always pays to take statistics with a pinch of salt.