Abroad, the scourge of terror leaves lash marks across our most loved global cities, while, in the words of The Economist magazine, a "politically inept, morally barren and temperamentally unfit" man rules the free world.

At home, the almost comedic dysfunction of our surprisingly multicultural Parliament last week overshadowed the more serious news that Australian living standards have stopped rising.

Pay packets grew just 1.9 per cent last financial year - gobbled up entirely by the 1.9 per cent rise in consumer prices.

Consumer confidence - cajoled back into good spirits after the shock of the global financial crisis - has finally capitulated, tumbling below the level where optimists outnumber pessimists - where it has remained for nine straight months, according to the latest Westpac Melbourne Institute Index of Consumer Sentiment.

"We have not seen such a succession of weak reads since 2008," Westpac's chief economist, Bill Evans, observed. "The survey detail suggests increased pressures on family finances; concerns around interest rates; and housing affordability in NSW and Victoria are more than outweighing increased confidence around jobs."

Truth is the Australian economy has been shuddering through some monumentally large gear changes of late.

It's not as if we didn't see it coming.

I remember attending an economics conference in Canberra in late 2011 where two esteemed Australian economists, Bob Gregory and Ross Garnaut, both warned Australian households to brace for a decline in living standards at the end of the mining boom.

It seemed so unimaginable at the time, but so obvious in retrospect.

We just lived through the largest mining boom in our history - and we didn't think there would be a hangover?

In a 2012 paper, Gregory explained: "In peace time, and over such a sustained period, Australia has never experienced such a large increase in income relative to so many other advanced economies. It now appears, following current national accounting practices, that Australian per capita income levels have increased about 25 per cent relative to the United States and now exceed US levels."

Why? Because the benefits of the mining boom were not quarantined in the Pilbara. Far from it.

A higher Australian dollar - reaching parity and more against the Greenback - helped spread the benefits of the boom through cheaper imports. We stacked our homes with new furniture, gadgets and flat screen TVs, on which we watched each other renovate and extend our homes.

Meanwhile, wages growth soared; not just for those in hard hats and steel-capped boots but also for the army of accountants, lawyers and deal-makers who serviced the mining sector. And the retail staff who sold all the flat screen TVs. And the hospitality staff who sated our Masterchef-inspired taste buds.

And all the while, tax cuts rained down on us from the nation's capital.

But that mining boom is now well and truly over. Commodity prices peaked in 2011 and while exports are now contributing to growth, much of the benefit of that flows to overseas owners.

The hangover of the mining boom has proven more painful than most economists anticipated.

The much touted "transition" from mining to other sources of demand has disappointed. Record low interest rates were supposed to fire up other parts of the economy. But they haven't.

Why? Because in response to lower interest rates, Aussie households did what they've done every time interest rates have fallen in the past: they borrowed more.

Today, many households find themselves shackled to mortgages they thought they could finance with mining boom-era pay rises, which have failed to materialise.

It could be much worse, however.

Most of the mining booms in our history have ended in periods of rapid inflation and sharply rising unemployment.

We have avoided that fate. Our problem is, in fact, the reverse. Inflation is lower than expected and the jobless rate is falling.

The pain of adjustment is being felt almost entirely in pay packets.

Is that such a bad thing?

It is, in fact, exactly what several decades of economic reform hoped to achieve: a flexible economy, in which prices were liberated to respond to economic shocks so as to cushion their blow.

So the Aussie dollar has fallen - helping exporters, including tourism and education - and wages have stagnated - employers have had the option not available in previous eras: to cut back on hours and wages rather than fire their staff altogether.

While in the pre-1980s Accord era, unions were able to demand wage increases above productivity increases - today the opposite is true, with wage rises trailing productivity gains.

But in a choice between a pay cut or a job cut, which would you choose?

The real question is whether this wages weakness is structural or cyclical.

It's structural to the extent that Aussie workers are now exposed to the same forces which have held back pay rises overseas, such as new labour-saving technologies and competition from cheaper workers in a globalised economy.

But it's almost certainly wrong to assume the weakness is entirely structural.

Fronting a parliamentary inquiry earlier this month, Reserve Bank governor, Philip Lowe, spent some time trying to hose down Greens MP Adam Bandt's assertions that "Neoliberalism is in its death throes" and interest rates no longer work.

Lowe pointed to buoyant business conditions, higher pay rises in parts of the construction sector and restated his prediction that the jobless queue will keep shrinking.

"My expectation is that the basic laws of supply and demand will work out here. If we can have a steady expansion, both here and in the advanced economies, the strengthening of the labour markets will eventually lead to wage growth picking up, and people will start feeling a bit better again.

"It's frustrating while we all wait until we get that strength, and it's very difficult for many households. We understand that, but we haven't given up hope that eventually it will come right."

Hope may seem a tenuous thing for a central banker to offer. As is the consolation that things "could be worse".

But they could be. And there is still good cause to hope for better days ahead.