I recently drew attention in this column to the fact that since the decline in manufacturing began in 2001, leading to a much-increased dependence on the lower-productivity service sector, living standards have been rising much more slowly than in the 1990s.
Between 1995 and 2001 personal consumption per head - which is the best measure of average material living standards - rose by an average of 6 per cent a year. But in the subsequent three years the rate of improvement in material living standards dropped back to about 1 per cent a year.
By any standards this was an extraordinarily dramatic shift, and I find it quite surprising that there has been so little public recognition of this radical change in our circumstances.
What areas of spending have been most affected by this development? At this stage we have estimates only for the first two years of recession, namely 2002 and 2003. The data for these are set out in the attached table, which contrasts average annual increases in personal consumption during this recent period with those of the preceding six years.
The table shows that only two areas of spending have escaped the impact of the much slower growth in recent years.
These are communications - which in effect means mobile phones - demand for which has continued to grow at over 15 per cent a year, and travel abroad, the demand for which has also maintained its earlier growth rate of almost 9 per cent a year.
To release the resources required to maintain the rate of growth of those two priority areas of spending, we have not alone sharply reduced the rate of growth of spending on most other goods and services, but have actually reduced the volume of consumption of beverages (both alcoholic and non-alcoholic); tobacco; recreation and entertainment; and professional services.
Moreover, the growth of spending on food, clothing and footwear and household non-durables has been halted.
Finally, car purchases have dropped back from the exceptional level of the millennium year 2000. Even allowing for the abnormal volume of sales in that year, it is significant that, although there was some recovery in car sales last year, their level today has since remained about one-sixth below the average for the three years 1999-2001.
In 2003 the volume of spending on communications was three times greater than it had been in 1998, before the mobile phone boom got under way.
And the boom in foreign travel has now reached the stage where the numbers going outside the State each year exceed our population by over one-third: last year our four million people made 5.5 million trips abroad. The numbers travelling on business have risen by two-thirds since 1995, and the numbers visiting relatives have more than doubled - but the number of tourists going abroad from Ireland has almost trebled. Visits to continental Europe numbered 2.7 million last year, four times the number in 1995.
Consequently, whereas in 1995 three times as many people went to Britain as travelled to the Continent, for several years past Irish visits to the Continent have outnumbered those to Britain. Almost half of all Irish continental visitors go to Spain and one-fifth to France.
What of the future? In contrast to the Celtic Tiger period during the second half of the 1990s, when, over a six-year period, overall economic growth averaged 8.5 per cent a year, we are unlikely to see growth in excess of 5 per cent a year in the period ahead, and at some point this process is quite likely to be temporarily affected by a setback in the house-building sector.
Moreover, to achieve this 5 per cent growth rate in an economy that is increasingly dependent on low-productivity services requiring high immigration, the associated population increase is likely to be around 2 per cent a year.
This contrasts with the Celtic Tiger years, during the first five of which rapidly rising labour productivity, combined with an exceptional rise in the domestic workforce, kept immigration down to a level that involved a population growth rate of well under 1 per cent a year.
Thus the maximum annual growth of per-capita output - which governs the rise in material living standards - is unlikely to exceed 3 per cent a year, as against the 6 per cent annual increase in per-capita resources that we enjoyed during that earlier period.
In the years ahead two factors may, however, begin to operate in our favour. During the Celtic Tiger years we had to set aside a disproportionate share of each year's resources - an annual additional 15 per cent - to raise investment from 17-18 per cent of GNP to today's 30 per cent figure, by far the highest rate in Europe. It is no longer necessary to continue increasing this allocation annually.
Second, the heavy annual increase in public consumption during the McCreevy years, an additional 7.5 per cent a year, peaking at almost 10 per cent in 2001 and 2002, has been brought back under control, with the Government currently taking only 2.5 per cent more resources each year to run the State, thus leaving more tax revenue available for redistributive social purposes.
During most of the five years ahead we can expect average overall consumption to rise by only 2 to 3 per cent a year - which at best would be half the annual rate of improvement during the Celtic Tiger years - although still a good deal better than the likely experience of most of our European neighbours, whose consumption per head has recently been rising by well under 1 per cent a year.