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New Zealand’s gross domestic product per person dropped 0.7% during December quarter as retailers offloaded inventory

Public Policy / news
New Zealand’s gross domestic product per person dropped 0.7% during December quarter as retailers offloaded inventory
Man at an ANZ ATM machine

New Zealand’s economy got 0.1% smaller in the last three months of 2023, bringing annual growth for the calendar year to just 0.6%.

Stats NZ reported gross domestic product had fallen for a second quarter, after the 0.3% decline in the September quarter.

This result was a small surprise for forecasters who expected 0.1% growth and the Reserve Bank which predicted no change during the quarter.

The largest downward drivers came from a 1.8% decline in the wholesale trade of items such as groceries, liquor, machinery, and equipment, Stats NZ said.

Retail trade in things such as furniture, electrical goods, hardware, and food and beverage services were also weak with a 0.9% fall.

Industry level results were mixed with half increasing during the quarter. Rental, hiring, and real estate services rose 1%, and with public administration, safety, and defence were up 2.8%.

Ruvani Ratnayake, a senior manager at Stats NZ, said the general election boosted activity in the public administration sector. This likely includes temporary workers hired to collect and count votes.

The expenditure measure of GDP was flat in the December quarter, with rising net exports being offset by businesses running down their inventory levels without restocking.

Data showed inventory levels dropped $1.3 billion in the quarter, after having risen $681 million in the September quarter.

Household spending grew 0.5% with more money being spent on transport services and less on alcoholic beverages and petrol.

This data release was the first which officially included a new income-based measure of GDP, as opposed to the existing production and expenditure measures.

Stats NZ said the income measure captures wages, profits, taxes, and subsidies in non-inflation adjusted prices. It will provide a “wider view” of the economy but not replace headline GDP.

This income measure fell 0.6% in the December quarter on a nominal, seasonally adjusted basis, while inflation-adjusted expenditure on GDP was flat.

Recession per person

What this data shows is that GDP per capita dropped 0.7% as the population grew by 0.6%.

New Zealander’s purchasing power fell 1.4% at a headline level and 2% on a per person basis, as measured by real gross national disposable income (RGNDI).

RGNDI is essentially a resident’s ability to buy goods and services from the countries income and it has declined 2.8% across the 2023 calendar year on a per capita basis.

This is in part because export prices have fallen 4.2% while import prices have risen 3.8%, hurting the terms of trade and meaning residents can buy less from any given level of economic activity.

Nominal GDP, which best matches the Government’s tax take, was up 0.6% during the quarter and 4% in the calendar year, bringing the total size of the economy to $405 billion.

There were only minor historical revisions to previous data over the past four quarters.

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265 Comments

And it will fall further next quarter. OCR relief needed now.

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9

Good luck with that. Gotta pay the piper first.

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43

Good luck with that. The RBNZ has no employment mandate now, and the economy is in stagflation.

We are only halfway through the pain of this downcycle.

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38

As soon as the Fed starts cutting we will follow suit. The sooner the better. The US economy is in much better shape than ours. At this point we are destroying quality businesses and entrepreneurs for the hell of it. Plain stupid. 

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11

USA is struggling to get inflation lower.

This will be a long battle with static or raising interest rates.

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11

The US inflation rate is already close to 3% and trending down. Powell just signalled in his speech today that they expect three rate cuts in 2024.

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8

BS. He said 'Higher, for Longer".

3% is 4%-5% in NZD terms of inflation. 

Go back to school. Literacy both in red'n & write'n and thunk'n is impotent.

 

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1

Go read the dot plots.   The projections of the Fed committee is for 3 cuts this year, with 9 of the committee members picking 4.625% as the appropriate end of year fed funds rate midpoint.  Currently the FFR 5.25 to 5.5%

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5

One point to note is that the Feds inflation target is an average of 2% inflation, over time. They don't stipulate what that time period is.

So it's all basically arbitrary.

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2

lol

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1

'Higher for Longer', means Higher for Longer.

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3

Without stipulating how high or how long

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5

You really need to understand the context, the expectation is still three rates cuts this year, but less rate cuts in 2025 and 2026, so really the message is "lower but slower."

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5

3% is 3%, currency isn't part of it sorry.

 

Think again lol

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0

Any business that can't survive an OCR barely above inflation isn't "quality", it's unproductive credit-hoovering disguised as something else. We'll be better off without them. 

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20

Probably why central banks the world over are embarking on some zombie hunting, at any cost.

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4

What a load of toss. So being a newly set up business carrying more debt due to startup costs isn't a quality business?

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8

It's an unproven business.

Unlucky though.

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6

Search for some new financing - good luck!! :-) 

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1

be careful what you wish for

we are approaching a situation where (eg) the supermarkets are wonderful (!!) businesses  ... except for a small nagging problem that a vast majority of their customers have ever decreasing income

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4

If they can’t handle the direct cost of interest rates then you are right. If they have significantly reduced revenue because people have no money then it is a bit different. 

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2

HGWR

Wrong wrong wrong - business issues are more about rising costs of Rent/Rates/Insurance/Power and reduced spending due to this and Govt regulation increasing other costs so lower profit and increased costs push a business to the edge and higher interest rates push it over. I hope should your roof blow off and you discover the only roofers have either gone out of business or are unavailable for 3 weeks and its July with snow on the ground that you are still pleased these unproductive business;s are gone..

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4

Depends on the business life cycle, you know that and are being disingenuous or you have no clue. So I suggest this is why people should not try true enterprise in NZ as this appears to be the prevailing attitude and why the smart ones set up overseas at the country loss because a socialist mentality doesn’t produce anything🙄

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3

Socialist mentality does produce a lot of C02 though, a lot of talking, waffling, complaining, promises, endless meetings. You are right nothing actually gets produced except large amounts of CO2. Therefore socialist mentality should surely soon be banned to save the planet.

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3

The socialist roads sure do produce a lot of co2. 
 

But can we at least keep those. I quite like them. 

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1

It's not the socialists collecting their universal pension benefit, it's the over-allocation of funds into speculation on existing housing (and rewarding of this via policy) rather than into building productive businesses. Successive governments have incentivised so many Kiwis into lazy land speculation instead of rewarding them for building a business.

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I agree.  Our economy is not in a bad state now.  The interest rates arn't that high.  If you're not making money now there is something wrong with the industry or your people.  (I will add that not all industries make money but are necessary for the economy and resiliency of our country - such as manufacturing)

 

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0

It's not the high interest rates, it's the reduced spending which is causing problems for businesses. However, the reduced spending is directly related to the high interest rates, partly due to increased credit costs and partly due to consumers  putting their money in TDs rather than spending it. 

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6

Suspect that the majority of likes attributed to this comment are from 'wage slaves' who never had the courage or creativity to start a business. Entrepreneurs are the lifeblood of any economy. We should take no joy in seeing talented hardworking losing their life's work due to an overzealous Reserve Bank that has made an absolute balls up of tackling inflation.  

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4

The reserve back was incompetent and overzealous when they crashed interest rates through the floor. That should never have happened. Many people saw it for what is was, made a lot of money by taking advantage, and called it right when the reversal came. All they are doing now is bringing rates back to where they should rightly be. Mortgage rates between 7-9 are normal. They will stay where they are, around that range. We won’t be seeing the low rates again. If businesses cannot survive in periods of normal interest rates, then they can’t exist. It is that simple.

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It's not really. Many matured economies are stagnant with little places to grow. When she all goes tits up, they'll print again.

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5

"Many matured economies are stagnant with little places to grow"

Please enlighten us as to which economies oh great Oracle ... 

Please also enlighten us as to what "tits up" means too. ...

A definition with numerical quantification would be much appreciated for us mere mortals (but we're not expecting anything sane ...)

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Jeez, when you ask so respectfully and politely, how could I resist the opportunity to jump into such an open minded convo.

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This is an adjustment back to normal levels of unemployment, and measured by our current account deficit, the fact that we have been living beyond our means.

This is the hangover from the period of excess and waste overseen by the last government.

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1

In theory with an aging population unemployment should be lower than average.

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0

That's already factored as the unemployment rate denominator is the size of the labour force, not the population as a whole. Our labour force participation rate is also one of the highest in the world so it's not low participation that flatters the unemployment stats.

We are an unproductive, low wage economy where the labour force is bigger than usual as people scrape to get by.

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That's already factored as the unemployment rate denominator is the size of the labour force, not the population as a whole. 

Yeah so if your labour force has been say 1000, with 6% unemployment, if it's now only 800, the unemployment level should be lower.

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2

5x as many over 65s are still working compared with 20 years ago 

Not for the love of it.

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9

Very low levels of building across the country I suspect will be keeping gdp lower. 

"Fewer building consents are being granted as people struggle to afford home loans amid interest rate rises and the cost-of-living crisis. The issue has prompted concerns New Zealand’s “most unaffordable city” will become even more expensive to live in. Kiri Gillespie reports. A sharp fall in building consents in Tauranga has sparked fears of spiralling house prices and a worsening housing shortage in a city labelled the country’s “most unaffordable”. Industry leaders say nationwide slow-down in consents for new homes"

https://www.nzherald.co.nz/bay-of-plenty-times/news/cost-of-living-cris…

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Who would have thought?

Good thing the previous government prepared for this

sarc/

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Don't worry, there's probably a  lot of holiday homes in Tauranga/MtM hitting the market in July.

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13

Flying high,

What wonderful news. I live at the Mount, so I can expect my severely unaffordable home to become absolutely unaffordable. If it's good for me, who cares about anyone else. But wait, what about my grandchildren? While my generation quietly cheer on ever higher property prices, the result will be to drive ever of our families overseas and we will bemoan their inability to get on the property ladder. This is called cognitive dissonance.

However, as the economic clouds get increasingly darker, I can't see prices rising significantly and my faith in this government's ability to 'grow the economy' is precisely NIL.  One small example; this is the party of law and order, yet while saying that more police will be recruited, the budget will  be cut by some 7%, resulting in fewer back-office staff to do the inevitable paperwork. If more police time has to be spent on form-filling, what sense does that make? of course there is fat to be cut from some areas of the public service such human resources, PR people and others. 

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Disclosure of self interest in this particular region, Flying high AKA-BuyLowSellHigh owns a leveraged rental at the Mount. 

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15

Its cool how you infer things about me. Would you like to say I dont give a Flying high F**k..

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3

You come across as not being capable of the high bit.

Or the bit after it; perhaps that explains the frustration...

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2

That's the best you can do. Retired poppy with his sad satire is more interesting 

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1

Would be interesting to know how much would be saved if the additional bureacrats Labour installed in Wellingtom were all terminated.

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1

No, if anything we need another 25bp hike, this is the rebalancing we had to have.

The 2 year swap is 25bp below it's long-term average. Interest rates aren't the problem, our lack of productivity and gorging on artificially low rates to pump up house and use that to buy Stabi's and Rangers instead of investing in capital goods is the problem. Climate inflation is also going to lower our standard of living, this is a glimpse as to what that will look like.

We should be taking GST off food and putting a capital gains and land tax in place to redistribute wealth. House prices need to fall.

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44

Sarc?

I thought you were a National supporter

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1

I'm centre and vote what's in front of me at election time. Any person who is tribal with their voting is a fool.

Bear in mind that NZ has had the most free market and generous residential investment property market in the world - those untaxed gains need to at least feed those on the lowest incomes. Tax cuts for landlords while poor struggle to put food on the table is f+++++ immoral, even though I am a beneficiary.

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59

That’s news to me. You have always come across as centre-right

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1

Centre right economics but centre left social equity. Anyone who thinks it's ok charging GST on food staples while having no capital gains tax on investment property needs to look in the mirror.

The only group I see trying to do something about this are Te Pati Maori.

How Luxon and co. are able to reconcile supporting lanlords and tobacco over those struggling to feed their kids is beyond me, I'd feel better about myself stumbling out of a Nevada whorehouse at 6am.

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34

If you could last at that to 6.00am, you could at least take an AAA+ for stamina.

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2

He didn't claim to be a patron!!!!!!!!

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0

....6am is early by Vegas standards - that would probably the usual arrival time as the casinos and clubs wind down :-)

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2

....6am is early by Vegas standards - that would probably the usual arrival time as the casinos and clubs wind down :-)

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0

Vegas is not the part where it is legal..6am perfect time to jump in the car and see sunrise at Death valley which is near..

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0

Ahh Speckles, not your first rodeo I see…. 

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1

Welcome comrade Te Kooti 

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12

Nevada AKA Ashburton? 

Yeah we've all been there...

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1

I didn't want to dox myself....

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0

I thought the similarity with Nevada finished at calling the town Ashvegas, perhaps you know something few other know - please tell.

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0

Rest assured Te Kooti that taking gst off food will not lower the price. Any perceived saving will be gobbled up in compliance cost - both via each business and secondly via increased IR staff to police it. I

It will also benefit the wealthy more (15% removed form the $10k dinner party is much more than 15% off the $100 grocery shop).

If you wish to help low earners fair enough, however this gst idea is a useless way to do so.

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6

The problem we have, is, that most don't understand removing/lower a tax is a crock. They parrot on that it will lower the cost of something, with the expectation that the lower cost will be permanent. - Spoiler alert - it's not.

We know this because we already pay x for product y. So yes, you will see y's price drop by 15% on the day. But it will then sneak back up to x within a month or two - because that is what the market will pay.

Lowering/removing GST (or any form of VAT) from anything is therefore unfeasible, as all it does is transfer wealth from the govt to the business - and it is usually the big corps that benefit the most. Lil' ol' ma and pa (the same ones that don't get it) probably drop the tax and are none the wiser.

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1

You're a better mathimagician than me, but 15% off the inflation of the past 4 years, probably won't have helped much.

Like 15% less sucky, is still mostly sucky.

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0

15% off my caviar and crayfish? Why thank you 

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0

Re the GST on food will have zero impact… supply and demand will set price, not the measly immediate potential price reduction of 13.04%

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0

Please explain why Orchardists couldn't find NZ labour at $30 an hour and imported islanders and others at less so they could be accused of exploitation.

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0

The benefit system. Very complicated going on and off a benefit or adjusting it. Effective 'tax' rate is 60% or more.

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2

Redistribution of wealth only makes sense when you have people competent at wealth redistribution. If this government gets its hands on someones wealth they will use it to give tax breaks to property speculators aka societal leaches

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10

Taking gst from food basics is the best way I can see to help those hit hardest by inflation. I'm pretty sure the UK do this.

If the Nat's raise GST in the budget whil cutting property investor taxes, I would classify that as class warfare.

 

 

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9

The best way to help is to be employmed so providing a valueable service or product and having the dignity of being self supporting and independent rather than bludging off productive taxpayers whilst being a couch potato.

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1

Agreed.

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0

There were warnings about GST aplenty at the time of its introduction. Jim Anderton for instance, that it was a blanket application of tax that disfavoured those least able to pay tax in the first place, ie low income earners. It is now too  well established to allow any selective reductions. For instance supermarkets able to now sell a product at a price know that is viable on the market and would soon have it back there. Likewise taking GST off local rates the councils could not resist loading them straight back up again. Reality of how it works really.

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2

No problem with CGT on realised gains, except on the house you live in.  Land tax maybe but not until the mess that QV is on land valuation. At the same time or before the method of land valuation that QV have to adhere to is in one of the Acts and that needs changing as well.

 

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1

I see Chris Hipkins, captain of the ship claims he wasn’t even in charge. Must be because he jumped off at the last minute and so it’s not his fault. How he can say that with a straight face is unbelievable. He and his moron team crashed the good ship NZ into the rocks. There is no escaping it.

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16

No so. At least not completely correct.

The RBNZ, by dropping the OCR to 0.25% and throwing money at the banks, had a far greater role.

Economic textbooks (being written as we speak) will reflect this and they'll not be kind to the RBNZ.

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12

Anybody who blames this solely on one side of the political spectrum is being willfully ignorant. This is the culmination of decades worth of poor choices from successive governments that eventually led us to this point. Look around the world, give me an example of a country with similar economic and social structures to New Zealand that feels materially better off than it was 6 years ago, our problems aren't as unique as we like to think they are.

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29

It's a recession, taking twice as long to happen as what's expected on average.

No one should really be shocked or outraged by this.

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4

This is the culmination of decades worth of poor choices from successive governments that eventually led us to this point. 

Poor choices?

NZ's boomer generation is 6th happiest in the world.  They've made some great choices.. at least for their own generation.  Diddums to the 'idiots' who waited till after 1990 to be born..

https://www.nzherald.co.nz/travel/world-happiness-report-nz-pushed-out-of-top-10-by-guess-who/LALEWCIVWBB4HPC4ZIK65DHX2U/#:~:text=Sarah%20Pollok&text=New%20Zealand%20is%20no%20longer,now%20sits%20in%2010th%20place.

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11

Countries with very different rankings at different ages reflect something unusual, relative to the world average experience for each age group. For example, the four countries in the NANZ group - the United States, Canada, Australia and New Zealand - all have rankings for the young that are much worse than for the old

*UK is similar. 

I wonder what these countries have in common?

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8

Disproportionate voting blocks 

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3

“A society grows great when old men plant trees in whose shade they shall never sit.”

Somewhere along the way this kind of thinking seems to have been lost.

 

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14

Sad indictment of NZ's elders.

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Oh. I see so using your logic chippie the dork as he now seems to be known was quite within his rights to blame the new government that barely had two weeks in office for this disaster, because of course that must be true. Now I understand. This situation has been obviously coming for a number of years as Labour possessed everything up against the wall. I’m actually surprised it’s taken so long. I’m now wondering when some economist is going to point to higher house prices coming soon as well…..because obviously that’s going to happen as well.

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0

I am more referring to this part of your comment.

He and his moron team crashed the good ship NZ into the rocks. There is no escaping it.

Blaming it solely on them is simple and easy, but it's hardly accurate. We are a tiny economy globally and extremely exposed globally, we have surprisingly little control over our own destiny. Even if we did everything the exact opposite of what labour did I honestly think we would still be in the same situation as we are in now, maybe 10% better off or 10% worse off but given how similar the parties are in a lot of way the end result would be pretty similar. If National was in power would the reserve bank of acted much differently? The reserve banks around the world seemed to act pretty similarly.

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9

But.....

I need a baddie to pin this on

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5

Singapore.

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0

Is it though? I have a couple of friends in Singapore and they seem to have a lot of the same complaints we do. I would also say that it is culturally quite different to New Zealand.

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3

The same complaints are being held almost universally. It's a global economic system and everyone's playing by roughly the same rules.

So the actual choice is how much you want to live in that system, regardless of geography.

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2

J. Hipkins has not got long to go and he knows it. At least that’s one thing he does know. Good riddance. In the front line for all the policy that he disclaimed and bonfired  out of expediency. Not one portfolio to be proud of. Least should he get out of politics as his one and only career to date he might well learn that glibness and smart alecing  don’t take you far in the real world

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1

The malinvestment during the last boom was unbelievable and the market requires cleansing further. The government also needs a clean up as well, which is underway. 

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1

Mass immigration and our economy actually shrunk.

Oh boy.

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66

We can't expect any revision of mass immigration policy by our intellectually superior overlords. It's onwards to 10 million.....20 million....... because massive overpopulation is such a logical pursuit on a depleting planet. 

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29

Every business or public agency linked to social services and infrastructure was already facing moderate to major funding and skill shortfalls with no end in sight. This year-plus frenzy of low-skilled migration has simply worsened the situation.

Cramming more people into the country is a sure-shot way to turn our ongoing infrastructure crisis into a full-blown catastrophe. We're locked into 5-10 years of double-digit rate growth in basic costs.

Either we pay up big and see an even bigger reduction in our disposable spending or see further reductions in our quality of life. In other words, we're at the end of the road with nowhere to kick the can.

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15

We were likely there 15-20 years ago, and just put the rest in Amex.

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5

No - no one takes Amex!

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0

Yip, that’s what happens when you have governments complacent with high house prices. Everyone gets mortgaged to the eye balls, nothing left in their pockets for discretionary spending in other parts of the economy.

But hey, the banks love it - massive profits. 
As for immigration to the rescue - 80% are foreign students, not much in their pockets to spend.

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29

" 80% are foreign students, not much in their pockets to spend.

You've clearly met very few 'foreign students'. Kiwi students are skint. No so those with parents wealthy enough to send them to overseas schools.

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Eh, those seem to be a smaller but conspicuously visible subset, in my experience. Very many out there who are struggling through hoping to get work and residency on the other end, including many who borrowed money.

Less since the reduction of the PTE (Pretend Tertiary Education) sector fraudulent colleges, obviously.

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5

Next two quarters we're buggered. In other news GDP data releases almost 3 months after the fact - that's terrible....

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27

Yep, the steering wheel (OCR) on this bus is connected to the road wheels with a very long stretchy rubber band, and the driver can only see the carnage behind him in the rear view mirror and take guesses at which way the road turns next..

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11

NZ has had five consecutive quarters of negative GDP per capita growth. Our per capita economy is now 4% smaller than it was in September 2022.

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29

That should be the headline

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11

Good analogy - try this one - RBNZ thinks its the signal master, pulls lever to send train on the road to prosperity but the lever is disconnected and the train crashes into the buffers - RBNZ is surprised ORR is it????????

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0

Calm down. Stats are flat out. They are urgently working on the CPI reweight so they can have it ready by April 2025.

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2

what or who is buggered? - this has been coming for a while now and we are all prepared right

Although some people may have forgotten the fable of the squirrel or did it not get turned into a youtube video

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The squirrel got in to BTC ETFs - jury still out….. Check in 5 years time.

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1

Arrh yes. That Winter of discontent is a com'n.

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Once again forecasts of commenters here closer than the spruikers

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25

It seems odd that the Bank Economists and the RBNZ keep missing their forecasts (often being too optimistic) with the amount of information they have, whereas the overall vibe of the comments here seem to be more on the money. 

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They don’t get out enough

useless

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8

Well, the job of bank economists is to sell debt. Hopium is their tool. The job of the RBNZ is to keep the banks in business. 

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12

Bad work product is what you get when you hire for diversity not qualifications.

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4

The reserve bank is known for its lack of diversity - the MPC itself even more so. Must explain why they've done such a stellar job. 

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1

Vibe-o-nomics is always better when it comes to economics or politics than boring statistical analysis or proper research (in fact somewhere last year pre-election I recall commenting that Vibe-o-nomics made it clear the government would change, around the time that National was crapping the bed in polls and the race tightened up). 

All I need to know is that my wife and her friends - for whom the subject of discussion is usually Taylor Swift's latest boyfriend or some smutty probably-written-by-AI novel they're all reading - are talking about how tough times feel, how holiday plans are being cut back on, how house upgrades are being put on hold. How do I know? Because I go to the dinner parties, and listen to the conversations ... and the spreads at the dinner parties are becoming more modest too. And none of the guys are talking about upgrading the car this year. 

I say that in only a slightly facetious manner as well. 

In other words, you don't need the weather man to tell you when it's pissing down. 

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Are we ready to talk about stagflation now - I know inflation is ever so slowly falling, but given its still a relatively high number and the economy has obviously stagnated - isnt it time we call this situation what it is.

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It’s been stagflation for quite a while

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12

We are missing the high unemployment. For now. But once we reach the tipping point it will accelerate quickly past 5%. Also we need to factor in the number of households that rely on at least 2 incomes to make ends meet. Week to week. One person loses their job and one household is instantly bust with little access to any increase in government income  support due to other person still working. So 5% unemployment is really 10%

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14

That will come soon. Retail and hospitality are in big trouble. The minimum wage rises and other inflationary pressures have killed them. People can’t afford to visit these places in large enough numbers to sustain many of these businesses any more, and many people just don’t see the value in a 15 dollar beer and at 40 dollar main that only contains 3-4 dollars of raw materials. Many of these places will fall over in the next few months. Winter will be a disaster.

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14

Read a report somewhere today that the fed raising rates is having little effect on their inflation. 

Inflation historically tends to be a tricky little bugger. I reckon rates will need to rise if they actually want to smash  it

 

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"Read a report somewhere today that the fed raising rates is having little effect on their inflation. "

Odd. US inflation is continuing to come down. Got a link? 

"Inflation historically tends to be a tricky little bugger."

100% correct. Inflation can come from many sources and often multiple sources at once. 

"I reckon rates will need to rise if they actually want to smash  it"

You may be 'reckoning' wrong.

Not all sources of inflation quickly respond to interest rate rises - albeit all instances respond to a massive contraction in economic activity. In some instances raising interest rates is absolutely the wrong thing to do.

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3

Maybe we cut to the core issue and that is housing/shelter needs to cost less.  Otherwise keep increasing minimum wage to give landlords more headroom to raise rents and the result is real businesses have a growing labour bill coupled with a shrinking revenue pie. 

From 2013 to 2023:

 

 

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10

oooooeeee if that's gross income, then the net wage increase is 41% due to lack of income bracket change.

lol rents are too high but yield is too low at current prices. Who on earth is buying investment property rn???

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2

Read Adam Smith or Henry George: when supply is tight, rents at the low end don't match the percentage growth in income, they match the absolute growth in income (less the growth in cost of other necessities). For higher end rentals it's more complicated because the rent incorporates a premium paid for the advantages of the property - but in NZ not many rentals are striving to offer advantages, because why bother when you can do the bare minimum and milk the supplement instead. 

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"We are missing the high unemployment. For now."

Based on RBNZ forecasts, expect an increase in unemployed persons from Dec 2023 levels by 30% to peak unemployment. 

 

 

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Pretty clear that it is stagflation, if the RBNZ admitted this someone might lose their job.  Hard to know how we get out of this until inflation falls away. Almost at the end of this quarter so guessing we will find out result end of next quarter 

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Agree with Stagflation. Quick drive around the MSM block, headlines are all technical recession. That wont help the flocks mentality at coffee catchup this weekend. (long or short blacks btw, no room for the plant based toppings).

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You can't have stagflation when the inflation rate has been falling for many quarters now. And - as yet - unemployment hasn't been rising though that's changing right now but the stats releases haven't caught up yet

If you're going to use big words - best learn what they mean first, ay?

https://en.wikipedia.org/wiki/Stagflation

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Inflation doesn’t have to be rising. It just needs to be high. And it is, still

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Inflation was 0.5% in the last quarter. That is right in the middle of the target band, is it not?

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Fair call. So maybe we had stagflation but it ended a few months ago

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We never got the high unemployment. I think this is just the classic inflation followed by (RBNZ created) recession. But if inflation does go up again we may see stagflation. 

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Not hugely out of line with expectations.  We're a country in the middle of a disinflation with tight monetary policy.  As we all know from history, that's a recipe for a cyclical downturn.  Getting domestic inflation down is going to take a lot more of this especially as the main components now driving domestic inflation are going to be very resistant to monetary policy - a range of administered, local and central government charges, insurance premiums and housing rentals.

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Its going to get a lot worse in the next 2 quarters, just look around and since this government has ordered austerity, everyone is cutting staff and spending is down the gurgler.  Wellington feels like its falling apart, huge drops in spending everywhere.

But you know, the government is like a household, landlords are more important than police and we gotta give some tax cuts even if they are tiny.  It really feels like we have replaced economic mismanagement in the beehive under GR with economic cluelessness under NW.

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Yeah it sucks. Both parties are pathetic. One believes enriching landlords creates an  wealth effect and somehow helps renters. The other seams to detest our democracy.

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This govt is challenging democracy big time. Refuse regulatory impact statements for their emergency repeals, this is why, it's a much bigger threat to democracy than co-governance hysteria, it's putting the power in the hands of big business...

https://www.rnz.co.nz/news/in-depth/512253/pm-christopher-luxon-s-tobac…

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Insane levels of "we know best"

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Sorry had to scoff there, after the last govt I can hardly call this one to be seen as 'we know best' by an order of magnitude in comparison. Otherwise you may as well lock yourself down, play repetitive adverts around COVID back to back 24/7 and line up for 45min to get into the supermarket again voluntarily.  

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Sorry which one of those examples shows we know best?

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The 6th labour government saying they know best by exercising unprecedented power over their citizens, many of which have been deemed unlawful.

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So if we assumed those were such examples, two wrongs would make a right?

Interestingly, Nats and Labour were in agreement that lockdowns etc were appropriate for the time, following international examples and advice rather than going against all transparency and advice because "they know best".

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Exactly, Covid emergency powers had cross party support and they were always time limited to address the minor issues of a f****ing global pandemic, not to steamroll private business interests over community, nature and our personal freedoms. 

You cannot classify these actions as anything over than the biggest roll back of democratic process since Muldoon. 

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That’s a load of BS. Co-governance, as prescribed by Labour was a racist rort and has been soundly rejected by the NZ public.

the current government is using the same mechanism to rollback this unwanted stupidity as were used to put it in place. The previous government rammed all this stuff through without any mandate whatsoever. The current government is rolling it back as quickly as possible because a) there are more important things to do than discuss cancelling stupidity, and b) these are mandated election promises that they committed to reversing in their first 100 days. So, they promised it, got elected because of it, and they did it. Where is the issue? I also see that 25% of the ministry of health are getting the axe. This is a good start. I’ll bet you any money that those going won’t be actual people that know about health, they will be all the useless hacks promoting cultural issues, gender issues and diversity managers. Good riddance.

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This post looks like pointing at other things that don't resemble the same powers that are being sought/granted. And distracting with talk of rolling back etc.

But we are specifically talking about giving ministers additional powers to push through what they want over and above the state.

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Really? Above it is talking specifically about emergency repeals, which I assume is supposed to say repeals of legislation under urgency not “an emergency” and it also talks about co governance. It does not actually make a lot of sense, but that is why is seems to say.

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".. Refuse regulatory impact statements for their emergency repeals, this is why, it's a much bigger threat to democracy than co-governance..."

No, it isn't.

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Yes it is. If you understood what governance is and what these powers do you would understand but because co-governance had Maori in it you drank the cool aid. 

How would you feel if these powers, instead of sitting with your favourite three ministers sat with Nanaia Mahuta, Golriz and Woods. Would you still be claiming this was fine? 

Take you political party blinkers off. 

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Its nothing to do with Maori. Any racist ethnostate is a failed state.

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Forms of co-governance of minority or indigenous groups and positive discrimination policies happen in China, the US, Canada, Malaysia... they are the ones I know about. But yeah they are all failed states right? Hang on...

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Tell us more about the Uyghur co-governance model…….

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Uyghur's are one of about 55 minorities in China, the Zhuang the biggest.  Many of them have special status', live in semi autonomous regions and have positive discrimination policies. For instance many of them were exempt from the one child policy, the han majority government actually wanted their populations to increase to increase diversity.  Many of the small minorities are actually protected strongly, even strongly islamic ones in the South of China.  Hell even the Uyghurs have special status, its just that there is violence involved, much of it the fault of Chinese governments pro development policy, but violently resisted and violently suppressed. Westerners tend to focus on that 1 but forget the other 54 who are promoted and supported by the government.

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Like the Tibetans?

Or any of the other 100 million or so mostly religious minorities the CCP persecutes.

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One believes enriching landlords creates an  wealth effect and somehow helps renters

I doubt they're stupid enough to believe it. It's about enriching themselves and their mates. The above is just the lie used to try and sell it to the wider public. 

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Looting for Landlords

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It leads to an increase in paper wealth for a small cohort of people who will spend up on low-value goods and services, creating more crappy minimum wage jobs across the economy that will need to be filled with imported labour.

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Landlord is not the problem, just easy target.  poor landlords, victim for some pathetic political narratives. 

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Yes, and likewise Bitcoin speculators are not the cause of high Bitcoin costs. 

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Just received latest contents insurance policy renewal, a mere 20% increase in premium, no inflation to see here........

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Yep with all the essentials rising rapidly discretionary spending is collapsing.

I know I have closed my wallet firmly 

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I know I have closed my wallet firmly 

When was it not HM? Your comments suggest it always has been...

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My wallet has been padlocked shut for a few years. Nuts are in the storeroom..

inflation always takes ages to sort out.. especially coming off the back of such an artificially extended boom.... USA isn't seeing it fall even though some sectors are being hammered .. ditto here 

 

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I hear you!   The thing is, insurance premiums are not going to be sensitive to the level of interest rates.  The RB is going to struggle getting domestic inflation down.  The other main source of inflation now is central and local government generated - think rates, car registration fees, RUCs, electricity lower user adjustments etc etc etc.  These are not going to reduce because of monetary policy.

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You forgot rising rents because of all the people piling in needing to be housed.

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I did and you're right!

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Yep count yourself lucky. Our combined house and contents premium up 35% 🤯

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Just got mine, a 32.7% increase this year, and thats on top of the 30% increase I got last year. 

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Job losses haven’t even really started yet….

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Job losses are rife through the construction sector, public sector not far away 

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Government and council restructuring is well underway 

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Restrutures are starting to flow through a lot of places. They just take a while to play out.

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Stuff today: "The Ministry of Primary Industries is cutting 9% of its staff."

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Would be interesting to see by what % they increased staffing since 2020 to gauge if this is an actual decrease or just bringing back to baseline. MBIE will have a hell of a job on their plate considering the numbers off jobs they have advertised and hired since. 

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MBIE is absurdly bloated

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Don't they manage things like building act, RMA, etc? Is that really a good place for cuts?

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"manage" is probably not the appropriate verb. I'm sure you're familiar with Parkinson's law.

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Cuts at customs too. Right when NZ is starting to get a taste for Coke.

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Les govt staff and demanding more productivity from those remaining. I guess we know their strategy 😂

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You are right.

Still plenty of work ready job seekers finding jobs. On par with this time last year.

Actually seeing a drop in people seeking a benefit from the start of the year. 

https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/s…

 

 

 

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Just been to my weekly coffee morning with friends. It was very quiet. Then drove home via the Main Street. Car parks everywhere. We are certainly hurting as an economy. These GDP figures do not surprise me. It actually seems quieter than the actual figure given to us. 

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You obviously don't live in Wellington (Council have abolished all the car parks).

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The bigger story is that we have declined even after importing 150k people in YonY, Real GDP would have fallen off a cliff, prepare for mass redundancies. 

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wellington are...

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Its no surprise that GDP data out today confirms New Zealand is in recession. This comes at a time when we have unsustainable levels of migration and sticky inflation. Imagine what the economy would look like with lower population growth. The Government has a lot of work to do.

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Biggest takeaway for those who don't read past headline numbers:

What this data shows is that GDP per capita dropped 0.7% as the population grew by 0.6%.

New Zealander’s purchasing power fell 1.4% at a headline level and 2% on a per person basis, as measured by real gross national disposable income (RGNDI).

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A shocker. It really is. Ignore those who sugar coat it.

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I am not a GDP forecast expert but any feel for what the current quarter's numbers will be?  I see worse than December quarter then just as bad for June quarter  - effectively in recession for 12 months

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I think around -0.3 to -0.4

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What stopped it being that this time? I can tell you having done that math:

- the election (public admin contribution)

- owner occupied property services - aka the amount of money that stats nz assume that people are paying to rent their own houses, which is linked to .. market rents!

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But population is going up so much! What is our economic activity per person?

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Its even worse than the headlines suggest as NZ is losing high value employees to Australia and replacing them with low value employees from the Third World. 

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Who cares if your kids don't have a teacher, or there are no police on the beat, and our infrastructure is crumbling - as long as there's a vape shop on every corner and a liquor store and takeaway on every street (and you can always get somebody to pick you up in a crappy old Prius on Uber when you're pissed at 2am). 

 

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Who to value more, though, teachers/police or property speculators?

This government has chosen property speculators.

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Like I said, the RBNZ should have cut the OCR in November 2023.

Too late now. The Recession will continue with more business closures and jobs lost.

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The fact we're seeing an almost synchronized global recession and fairly similar central bank activity world wide should indicate that avoiding a recession isn't much of a priority.

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Virtual chocolate fish to Jfoe who was closest.

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My -0.3% was a bit negative, though after adjustment on a per person basis , may be closer.

you may have to give out more fish once revisions come in.....

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Takes a bow!

I should have remembered that when rents increase by more than than CPI this pushes GDP up (through owner-occupied property service cost - basically imputed rent). I knew the election in Q4 would stop things being too catastrophic. I had -0.3% next quarter I think. I might actually downgrade that now that we have seen the latest current account deficit data, The next year looks horrific.

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Interesting graphic. (Just been told that banks are going to look very carefully at what sector borrowers are in and may refuse lending to some. I.e. bank 'stimulus' may be less than estimated.)

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Stats NZ reported gross domestic product had fallen for a second quarter

That's the common definition of a recession, even before taking into account GDP per capita.

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Yet no use of the word in the article other than ‘recession per person’

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That's the common definition of a recession, even before taking into account GDP per capita.

No need to try to convey you have a rich understanding of how to understand data Dr Y. We know your forte is in the trolling skits. Stick to you knitting. 

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Having a bad day?

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He got another written warning for loitering near the water cooler too much.

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I don't like most of what you say but this did make me giggle. No offence JC.

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You don't understand the attitudes and behaviors of the water cooler and neighborhood BBQs, then it's difficult to understand what's going on. 

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Poor old Daphne just wants to swap scone recipes and you keep pestering her for her takes on money supply and geopolitics.

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You just have to listen. And it's much like the behavior of puppet trolls. It's relatively to easy to decode their fears, motivators, etc. 

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It's easy to assume that's what you're doing.

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Scones around the water cooler !  I can see why Jesus Christ spends so much time there.

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lol, Daphne learnt long ago that the water cooler requires a stealthy approach then a rapid strike and withdraw unless you want to be apprised of the latest theory on why Bitcoin is the best thing since sliced bread.

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It got even worse when JC moved his desk right next to it.

Everyone ended up bringing 1ltr flasks to work.

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Oh, I assumed JC was the water cooler boy. Is that not so?

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That’s the twist, it’s not water.

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Water and off-brand Raro.

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Oh boy.. 

This is what we're going to see in the upcoming months

https://www.stuff.co.nz/politics/350220974/hundreds-lose-jobs-ministry-…

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Leases are locked in so and saving has the be cutting people and programs. NZ voted for right sizing govt dept bloat. 

#nosurprise.

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I expect between staff and contractors maybe 10% across most departments, few other ways to cut "costs" given projects have their own cost centers

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The savings are being applied to whole agency budgets. Several orgs in scope would have to sack *all* of their staff a few times over to make the savings required of them. This means that it is the external spending that will have to be cut - and that means thousands of non-govt jobs for the chop. Incredible that the media hasn't done the basic maths to work this out yet.

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MPI will still have circa 3500 FTE's after the cuts - cf  2500 in 2017

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And yet despite this kind of thing starting to become widespread, outrageous cost of living, and high interest rates you think housr prices will rise significantly this year?

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Everything's in place for houses not to get cheaper in the future.

Possibly not this year or next though.

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Who keeps Foot & Mouth (amongst other nasties) out of NZ ???

Why it's MPI (and other government departments) !!!

We can all immigrate to [chose anywhere else] if there's a failure.

 

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NZD-USD exchange rate would be in the 40's in a few minutes if Foot & Mouth ever made it into NZ. Might be a bit inflationary.

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Wonder if this govt will cut funding for battling Micoplasma Bovis as part of funding a free ride for property speculators and their own MPs' investment portfolios.

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Might be in the upcoming days rather than months.

About 180 roles could be disestablished at the Ministry of Health (MoH) as it looks to downsize staff numbers by 25%.

https://www.thepost.co.nz/politics/350221256/ministry-health-looks-downsize-25

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Granted the sheer volume they took on 2019-2021 for the potential cannabis reform legislation (was being worked on in in advance in case of a yes from the referendum) and the end of life act, plus all the covid roles, id say they are still bloated after this culling.

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They kinda did get the reform, there's supposedly hundreds of thousands of legal medicinal cannabis patients now. 

They still did it, just via stealth.

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Ocr cut is coming - could be April. 

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It will be after the fed

 

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When piggys fly.

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Did anyone ever figure out why the annual doesn't align with the quarters? 3 of the last 4 quarters have been negative, yet we have +0.6% annual. 

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National's 100 day plan really got the country moving ahead...

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To be fair you need to give any government at least a couple of years. Although I am not holding out for much hope for them

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Agree - but did any of their 100 day plan have any possibility of improving the economy? It was all about being anti woke, meanwhile economy going backwards bigtime. 

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Good point and no not really. I guess they will argue some things that ‘cut through the red tape’ (like the fast track consenting legislation) will help, although I don’t think it will

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Anything any government could do in just 100 days to avoid what's happening would be extremely short lived.

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I wonder how many 100 day plans they've got stashed in their back pocket?

Also how many lists have they got to tick off their achievements? Luxo's starting show he's a bit amateurish at this kinda gig. 

Can't wait for the knives to come out.

 

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and real estate services rose 1%

that's interesting. 

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Isn’t it just seasonal 

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low base i'm guessing

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NZ at best is a mediocre performer whihc reflects the effectiveness of Govt policies to improve the living standards of NZers - 

GDP rank46th (nominal, 2023) 52nd (PPP, 2023

 

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Good to reference sources. Gives it a bit of context. 

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Indeed. Most Kiwis still think we're in the top 20 on a PPP basis.

Can someone remind me what the government's plan is to get us back to where we were when boomers were fist starting work and buying their first house?

FWIW - Wikipedia says 62nd on a PPP basis. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) ...The actual number doesn't really matter much ... Just look at the 5 above and 5 below ... Such good company to be in.

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Can someone remind me what the government's plan is to get us back to where we were when boomers were fist starting work and buying their first house?

Be on the winning side of a war that left Europe and Asia in ruins.

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Even better, stay out of the War and supply both sides with stuff. 

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Just a reminder that PPP does not mean per capita. 62nd in the world doesn't mean much if not considering population.

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Maybe those farmers can dig us up a prize winning potato or a Kumara or even a Carrot? Or maybe a Nugget, a Chicken Nugget or Gold?

Luxons already out of 💡 ideas I reckon. 

Winston to the rescue!

https://youtu.be/4fxA7zLLQzY?si=pkbqwWpf-ymWXAQB

 

 

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While he speaks truth about the media, he will only rescue himself when the sh$t hits the fan, as proven by decades of past behaviour.

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At least our councils have planned for this day!

Imagine if we had a train of historic rate increases going forward just to keep the water turning up and the shi% heading downhill ...

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The good news for Kiwi's is that they can still jump on a Jetstar special and head over the ditch, as Australian unemployment has fallen again from 4.1% to 3.7%.  This is despite a record level of immigration as Australia absorbed a net 548,800 new workers.

Don't know that unemployed Labour MPs and their public servant ilk count as employable though.

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Trouble is, they're heading into an even worse housing situation.

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How so? Could you explain why you have come to that conclusion?

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In some regions they're building even less houses than us per additional head of population, and have a building industry that's been bashed worse over the past 12-24 months, in terms of insolvencies and job losses.

They're losing building capacity just as they really needed to be increasing it. We're not too far behind, but a shift to Aussie is going to be a sideways one, on average.

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"https://www.theage.com.au/politics/federal/migrant-numbers-growing-as-g…"

"New figures out on Thursday are likely to show a further lift in net overseas migration, putting more pressure on the government to limit population growth."

Get in quick ...

 

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"Here we go again. It’s the most important one-man show on Broadway. It opens, and then reopens 6 or 7 times a year. And the star of the show, the Fed chairman, Jay Powell, plays himself.

The great thing about these Powell performances are they’re like Rorschach tests. You can read anything into them you want.

Wall Street spends untold sums hiring analysts who try to interpret Mr. Powell. Investors are undoubtedly baffled by all of this."

"Higher, for Longer."

https://www.reuters.com/markets/rates-bonds/feds-rate-cut-confidence-li…

 

 

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Did you miss the actual headline... "Fed sees three rate cuts in 2024 but a more shallow easing path"

 

Lower, but slower.

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"Higher for Longer".

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lol, sure, not what was said, but keep chanting your slogan.

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The Jackson Hole Hui are all that matter. The G20 turned up and that plan is still in play. Powell loves to tease the market and then holds out on them again and again and again which drives up markets just in time for quarterly earnings and dividends. Rinse and repeat. He can keep this gig going for ages.

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We are watching a slow motion crash as business go under it will take down others, unemployment will rise putting huge financial pressure on many.

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And it all happened before house prices crashed.

So as I've always attested to, the likely environment for lower house prices isn't something most people should be excited about.

A consolation prize at best.

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Well you did vote Labour…. 

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Another crisis ... like the other crisis before the last crisis ... Have we made the mistake of thriving on crisis situations? I wonder whether we havent gone 'ultra' sometimes? 

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Higher for Longer!"

Bank of England leaves interest rates at 5.25% but signals future cuts https://www.theguardian.com/business/2024/mar/21/bank-of-england-keeps-…

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