NEW: Amanda Gome

With the average Australian owing $160 for every $100 they earn, something had to give…

Is this the end of the consumer boom?

With the confidence of many business owners at record levels, how we wish the boom mentality that has seen many businesses enjoy years of good times will last forever.

But readers, it can’t. And while we all resent a 0.25% rise, it might be the time for us to wish that the rise actually works, dampens consumer sentiment and leads to a bit of correction and a shift in attitude. Because if the correction doesn’t come now, it will come later – and it could well bite harder and deeper.

The reality is that consumers cannot keep spending at the pace they have enjoyed for the past 10 years. Consumers are now facing the highest borrowing costs for 11 years. Yet still they spend.

Christine Christian, chief executive of Dun & Bradsteet, points out that Australians owe $160 for every $100 they earn. We also know that 600,000 small businesses with revenue of less than $2 million owe the tax office $6.4 billion.

Aggressive promotion of borrowing by some financial institutions and mortgage brokers, and the ease at which people can draw down equity on their mortgage, are partly responsible for fuelling the binge.

But Christian believes we are living in a culture of “want it? Get it now.” We have lost the capacity to delay gratification, to save, to wait for what we want.

And as we know, many small businesses have been funding their business with money owed to the tax office.

With a bit of belt tightening now, we may well be able to starve off a greater correction.

What do you think? Write to Feedback@smartcompany.com.au