What happens when the mining boom ends?

A VERY remarkable thing is happening to the Australian economy; something we've never achieved before.

The biggest mining boom since the Gold Rush days is coming to an end and our economy is chugging along relatively in tact.

This is no mean feat. Mining booms of yonder year have always ended in tears, in a burst of inflation or recession, sometimes both.

But thanks to some nimble gear changes by the Reserve Bank over the past half decade, there is hope that 2014 will be the year we finally end up on the road to more balanced growth.

We all remember how the Reserve slashed interest rates during the GFC - sweet relief for mortgage holders who had been paying double digit interest rates.

When the worst of the GFC appeared to have passed in 2009 and 2010, the Reserve brought interest rates back to normal again.

But by late 2011 it became clear that something was amiss. Not only were commodity prices softening - as government stimulus in China petered out - our turbo charged Aussie dollar was putting pressure on the rest of the trade exposed economy.

Since then the Reserve has cut interest rates on eight occasions - the last cut, in August last year, taking the official cash rate to a record low.

Since then it has been a nervous wait to see if debt shy consumers can find the confidence to take over the reigns of growth from the mining sector.

The main question as we enter 2014 is: has enough already been done? Have we seen the last rate cut?

Increasingly, economists think we have.

In fact, the median forecast of 30 economic forecasters surveyed by Bloomberg is for rates to remain exactly where they are for the whole of 2014.

Sure, forecasting's a tough job - "no change" is as safe a bet as any.

Some forecasters, however, are out on a limb. Westpac chief economist, Bill Evans, puts grizzly bears to shame his forecast of another two rate cuts this year.

Soaring above them all is the hawkish Stephen Koukoulas of Market Economics who expects the cash rate to rise 1 percentage point by years end.

Somewhere in between, HSBC Australia's chief economist Paul Bloxham says 2014 will see the end of the Reserve's easing cycle. While the long awaited "rebalancing" in growth from mining to the consumer sector has taken longer than expected, Bloxham thinks there are signs it is here.

"We continue to see the Reserve's easing phase as done," he says.

Retail sales and building approval figures released last week hint at a recovery in consumer spirits.

Households have spent the last half-decade repairing balance sheets, getting ahead on the mortgage and saving.

But retail sales have now grown for seven consecutive months, to be 4.6 per cent higher over the year. Sure, this is nothing like the 7 or 8 per cent growth in sales posted during the pre-GFC days debt binge days. But those days are over.

We tend to underestimate the importance of consumer spending in powering our economy, but it makes up about two thirds of all economic activity.

Investment in housing construction is also picking up. Building approvals fell slightly on the latest monthly numbers, but are up more than 20 per cent over the year.

A shortage of supply and renewed interested by investors in housing is driving a boom in new apartment building.

If sustained, this will create jobs and also keep a lid on property price rises. (Although Bloxham is still tipping double digit home price growth this year.)

Recovering retirement nest eggs and home values are both helping to restore financial spirits.

And do you hear that sound? Silence. Silence is what we're hearing from offshore. Europe's debt overhang continues its slow burn, but the crisis days appear behind us.

Meanwhile, the US economy is in recovery mode, creating jobs again. The US Federal Reserve, under new chief Janet Yellen, will spend 2014 withdrawing extraordinary stimulus measures, while making sure this does not choke off recovery.

And on Capitol Hill, the worst of the debt ceiling debacle appears to have passed, as Republicans and Democrats work towards a compromise deal on restraining spending to avoid another damaging shutdown.

Closer to home, the Chinese dragon is subdued, but still powering along at near 8 per cent annual growth.

Of course, if predicting the future were possible, economists wouldn't be wrong as often as they are.

The one dark cloud on the horizon is the jobs market, which continues to be sluggish at best.