You know you are in trouble when the most cheerful thing the Finance Minister can think of to say about the economy is that people are no longer drawing down equity in their houses to spend up large.

Bill English highlighted the multi-billion-dollar turnaround from net equity withdrawal during the housing boom back to the more normal net equity injection, when briefing journalists on the release of the Government's accounts for the 2009/10 financial year.

The change represents about a 10 per cent reduction in households' spending power, at a time when incomes are flatlining.

It helps explain why figures out yesterday continue to show retail spending and the housing market are going sideways.

It represents a new realism on the part of households, English says, and a step towards "rebalancing" the economy towards less borrowing and more saving, less consumption and more investment in productive assets, less importing and more exporting.

But there is no joy in it for businesses or for their employees.

We won't know for sure until December, but there is a decent chance the economy did not grow at all over the past six months.

It is troubling if that is the best we can do at a time when the stimulus from the Government is at its peak, interest rates are as low as they are going to go, and export prices close to all-time highs.

We are a quarter of the way into a financial year in which the Government expects to run a cash deficit of $13 billion (up from $9 billion last year).

Likewise the average mortgage rate people are paying is as low as it is expected to go in this cycle.

And world prices for a basket of New Zealand export commodities are just 1 per cent off their all-time high last May, boosting farm incomes. The net effect is a joyless, jobless phase of the recovery, where progress is measured by the fact that we have gone from being up to our nostrils in debt to merely up to our necks.