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Economic doldrums

Written By: - Date published: 9:56 am, September 19th, 2015 - 16 comments
Categories: economy, national, uncategorized - Tags: , ,

National’s mismanagement of the economy has left us in the economic doldrums. Here’s Brian Rudman:

Unemployment is heading back above 6 per cent, having never fallen below the 5.5 per cent recorded in September last year. Growth also peaked last year. It has been boosted by a surge in net immigration but that also means that in per capita terms, gross domestic product growth is a lot less than the headline rate.

By the latest June quarter, annual growth in expenditure GDP was 2.7 per cent but only 0.4 per cent per capita. And the Reserve Bank, in its latest monetary policy statement, now expects the output gap to remain negative for two more years. That would make nine – nine! – straight years in which the economy produced less than it could have. If that was as good as it gets, it wasn’t all that good.

But on the Reserve Bank’s forecasts, households face the unpleasant squeeze of a labour market which is weakening while inflation rises towards 2 per cent. In last week’s statement, the bank has slashed its forecast for economic growth in the current year to March 2016 by more than a percentage point, compared with what it thought in June.

So we are left with a picture of a cycle that never really came close to overstretching the economy’s resources and creating a seller’s market for labour. And now it is clearly on the downward slope.

Former Reserve Bank economist Michael Reddell now blogs as Croaking Cassandra. Earlier in the week he had this to say:

[Australian PM] Turnbull is quoted as saying

“John Key has been able to achieve very significant economic reforms in New Zealand …

I grabbed a piece of paper from my bedside table and starting trying to jot down on the back of the envelope the “very significant economic reforms” in New Zealand over the last seven years.

It was a short list.  I couldn’t think of any.

New Zealand has made no progress in closing gaps with Australia over the seven years John  Key has been Prime Minister –  not on GDP per capita, not on national income per capita, and not on productivity either.  If anything, we’ve drifted further backwards.

I’ve said it before and I’ll say it again – Labour is the party of economic competence in NZ.

16 comments on “Economic doldrums”

  1. Detrie 1

    Yes, this is typical of politics now. It’s been decades since we’ve taken politicians seriously, especially now that money and power, not principles or honest representation of the public will is the name of the game.

    To quote author Robert Hutton, an expert on this topic “Politician-speak has become so coded that it’s essentially another language — what you might call the language of uncommunication.” It just proves the old mantra. ‘How do you know if a politician is lying? Their lips move…” But to be fair, sometimes, they’re just plain ignorant or have a convenient ministerial ‘brain fade’. Our own Prime Minister frequently has them and it seems a valid excuse today.

    Ref http://bit.ly/wouldtheylie

  2. vto 2

    yep, economic doldrums for sure…. the ship’s sails are hanging flaccid, the sea calm ….. while the heavy southerly fronts intensify and move steadily closer ….

  3. Stuart Munro 3

    On the upside manufacturers of pikes, tumbrels, and guillotines can expect improving demand.

  4. Hence why Rudman is getting the sack.

  5. ianmac 5

    I do hope Brian gets another job equal to his talents somewhere where he is recognised as a competent honest writer.

  6. Adrian 6

    Getting rid of Brian Rudman is just part of the malaise at Granny.
    The coverge of the impending, albeit mini, tsunami was pretty much missing in action, even hours later using the map of potential wave hieghts, issued 12 hours before by NIWA, as WHERE they hit, and in a gossip type column.
    It’s rooted. Yay.

  7. Keith 7

    Its Brian Fallow and yes I read it yesterday. But it doesnt matter. Economic malaise becomes economic dynamic flexibiility, (meaningless but sounds good), it’s Bill English’s mythical 2-3% growth.

    All they do when bad news is knocking on the door is get David Farrar working busily behind the scenes, (this is what John Key means when he says he’s seeking advice) to polish the turd so the mentally lazy voting public can live with the shiny acceptable thing that looks suspiciously like a turd and on we go, polling in the 40’s as per normal.

  8. greywarshark 8

    A book that Chris Trotter published in 2007 No Left Turn fits in here. All about what happened after NZ was colonised by the Brits. There were two parallel aims from the first, onegroup wanted to make a better life than the old in defunct Britain, and the other to make a quick profit.
    See Trademe Start price: $16.99 Listing #: 951996364

    And that end of profit before else was pursued with “jamming radio broadcasts, political arson – even murder. From Massey’s Cossacks to Muldoon’s riot squads; violence and repression have been the Right’s weapons – not the Left’s. Charting the evolution of New Zealand’s unique brand of democratic socialism, Trotter offers insightful and often surprising verdicts on the leading participants, including John A Lee, Peter Fraser, Fintan Patrick Walsh, David Lange and Helen Clark.”
    – See more at: http://www.randomhouse.co.nz/books/chris-trotter/no-left-turn-the-distortion-of-new-zealands-history-by-greed-bigotry-and-right-wing-politics-9781869418090.aspx#sthash.nHga4R0Y.dpuf

  9. maui 9

    we’re told that these guys are the only people who can look after our economy, even though at least the last 15 years tells us differently. How stupid are kiwis really? they’ve been played and they still accept the spin. Don’t let the boogeyman into power is what they’re told and they still believe in the boogeyman and they’re adults!

  10. Bearded Git 10

    I couldn’t believe this rubbish from Gaynor in the (we don’t have any journalists left) Herald today singing the praises of the NZ economy compared with the Aussie economy. When you look at the stats there is not much in it and if you looked at the last 5 years Oz would be ahead.

    Rampaging house prices are in the “good” column. Mmmm…..

    Gaynor very much on-message for his Nat Party mates.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11515616

  11. Draco T Bastard 11

    US STOCKS-Futures drop as Fed fuels global growth concerns

    An economic environment in which the Fed feels it cannot end the era of near-zero interest rates is not one likely to foster the kind of earnings growth needed to support stocks at their current, above-average valuations.

    Why China’s yuan may be set for 15% devaluation

    China, the world’s second-largest economy after the U.S., devalued its currency last month in a bid to help exporters. The country is grappling with a softening economy and wild swings in the stock market.

    “Having achieved a 3 percent move in a few weeks, they would not want to stop here. Their ultimate target is probably a 15 to 20 percent minimum move in the trade-weighted index,” IDEAglobal cited the source as saying in an interview.

    The reality is that we’re still in the GFC and that the world doesn’t appear to be coming out of it. The RWNJs only course is to do more of the same that caused the recession in the first place and so we have government austerity, increasing privatisation and tax cuts for the rich. All this will bring about is a further collapse of the economy – just as it did in the early 1930s.

    • aerobubble 11.1

      As people took on debt they needed to earn more to repay the interest, as companies took on more debt as people kept putting purchases on credit they needed to spend more on shop upgrades and so more debt. Prices rose and the finance industry boomed, the ability of the market to assess value was diluted as all that matter was who could take on debt. Globally China is sitting on a pile of IOUs and the west has been printing them. Everything costs too much, nobody is paid enough, even bankers need year on year million dollar bonuses to keep up, so I ask you why would you put in an extra hour to earn an extra dollar when the financial system prints, borrows over pays itself and you’ll be working for them not yourself. Doesn’t free markets mean that govt has no role and we being represented by parliament have no say now. Key summed it up, we all back the rugby because parliament does, and key say you know parliament represents us all. I.e those that don’t vote and those that don’t matter as all te analysts are free marketeers who don’t believe govt has any power or place.

  12. Ad 12

    Rudman is an unrepentant old lefty from waaaay back, which is why he’s been so impatient with a corporatist Lite-Labour like Mayor Brown.

    The Standard editors could simply reach out to him and get him to do columns right here, to keep his profile up. He would be great scrutinising candidates for the upcoming Auckland elections.

  13. Draco T Bastard 13

    Death and transfiguration

    A new report by the McKinsey Global Institute provides some invaluable statistics for any future Gibbon, which MGI calculated by crunching data from nearly 30,000 firms across the world. Corporate profits more than tripled in 1980-2013, rising from 7.6% of global GDP to 10%, of which Western companies captured more than two-thirds. The after-tax profits of American firms are at their highest level as a share of national income since 1929.

    And we know what happened just after that don’t we. Do the same things, get the same result.

  14. Ad 14

    Draco, Schumpeter seems to have the “dark Satanic mills” version of corporations in mind, eg mining companies, petro Giants, old telcos who didn’t successfully reinvent, car manufacturers, agribusiness, clothing giants etc.

    He is so wrong. Corporations now successfully contest states to a degree not seen since prior to WW1. But increasingly so do cities. And so too do regional trade blocs. Democracy and media-assisted accountability is also retreating globally faster than Fox Glacier. If we get another of Schumpeter’s “creative destruction” upheavals apropos the GFC, we will simply see the global banks and other corporations increase their global dominance, not lessen it.

    A globalised resistance to this is for another generation to take up.

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