Despite the heroic efforts of National’s spinsters (Hi Matthew!) the economic “recovery” remains anemic. Over the last few days we’ve had various reports. Let’s start here:
Economy grows just 0.3pc – half expected pace
The New Zealand economy grew at half the pace analysts were expecting in the first three months of the year as drought across the North Island sapped milk production and dragged the agriculture sector down. The kiwi dollar fell on the numbers.
Gross domestic product grew 0.3 per cent to $37.1 billion in the three months ended March 31, from a pace of 1.5 per cent in the December period, according to Statistics New Zealand. That’s half the 0.6 per cent rate predicted in a Reuters survey of economists and below the 0.5 per cent pace forecast by the Reserve Bank in its June monetary policy statement published last week.
The economy grew at annual 2.5 per cent, in line with expectations, and activity in the March quarter was 2.4 per cent higher than the same period a year earlier. …
“Today’s data confirmed the economy started 2013 on a mixed note, with recent quarterly volatility a reminder that the economy is navigating its way through various shocks. This volatility looks set to continue given the pending drought hit, with the required shift in resources to facilitate rising construction sector activity likely to create tensions,” said [ANZ economist] Smith.
“Moreover, the housing-induced uplift still looks difficult to sustain without a pronounced improvement in the labour market backdrop, and with pending fiscal tightening and a RBNZ prudential policy response.
We’re spending our houses again. Not good. And there’s cause for concern on jobs too:
Job ads not at economic recovery party
Job advertisements fell 1.7 per cent in May, reversing previous gains and indicating that the job market has yet to catch up with the economic recovery, ANZ says.
The latest ANZ New Zealand Job Advertisements report shows newspaper job ads fell 7.2 per cent in May, while internet job ads fell 0.7 per cent. This was despite strong gains in February and March.
Given that job advertising leads changes in unemployment data by six months, the new figures suggest a risk the unemployment rate will rise, the bank said.
When it comes to the big picture you simply can’t beat Bernard Hickey:
Reform tax to spread recovery fairly
…Stock markets around the globe slumped when US Federal Reserve chairman Ben Bernanke threatened to turn off the money-printing drip by mid-next year. Long-term interest rates rose sharply. Most importantly for New Zealand, even China’s new leadership got in on the act, forcing up interest rates to their highest point in a decade. The NZ dollar fell three US cents to its lowest point in a year. Banks started raising fixed mortgage rates. Now we’ll see just how sustainable the economic recoveries in the US, China and NZ are. Will we see yet another false start before a relapse to medicated remission? …
NZ shares a big problem with the US and Europe. Our household sectors are still heavily indebted and incomes in the middle and lower income groups are barely above where they were five or six years ago.
Figures this week show NZ’s real per capita GDP is still 1.3 per cent below 2007’s. Most of the gains in any economic recovery have gone to the top few per cent of the population. Property owners in Auckland and owners of stocks have been the major beneficiaries.
A study of the US recovery from 2009 to 2011 found the incomes of the top 1 per cent rose 11.2 per cent, while the real incomes of the bottom 99 per cent fell 0.4 per cent, which meant the top 1 per cent captured 121 per cent of the recovery’s gains.
True economic rehabilitation requires reform to more heavily tax the incomes and assets of the wealthiest 10 per cent then redistribute that as income to the bottom 90 per cent. [My emphasis]
As I’ve been saying for a long time now – we’ll dig ourselves out of the economic doldrums eventually, not because of the Nats’ policies, but in spite of them. All National have managed is to hold us back for four years.