The ghosts of economic slowdown, past and future
Today we find out if we’ve been in a technical recession. Yesterday the IMF issued a warning for the future saying growth will be slow and a lid should kept on spending
In today’s edition: the bid to harvest the rural vote; Te Pūkenga restructure details emerge; a ruling on whether you should store classified documents in a bathroom or a garage; but first, GDP data is out today and we got our report card from the IMF
(Image: Tina Tiller)
GDP data due today
The ghosts of economic growth past and economic growth future have arrived. Today we get Gross Domestic Product (GDP) data which will tell us whether we’ve had a second quarter of negative economic growth which would qualify us as having gone through a recession. A retrospective set of data, it gives us figures for the three months to the end of March this year. The last GDP update on March 16 for the quarter ending December 2022 showed that the economy had contracted and growth was in the negative at -0.6%. In keeping with the crazy times in which we live, economists are divided on whether we’ll see growth expansion or contraction today.
Less overheated rather than weak
Recession is a kind of boogeyman word that spooks markets, opens up the floor for blame and in non-economic speak, affects the general vibe. Westpac economists are picking a 0.4% contraction but also seem quite chill about it (paywalled), saying “We’d characterise the economy as ‘less overheated’ rather than ‘weak’. A substantial cooling-off period is needed to bring inflation fully under control.” It’s worth keeping in mind that there are arguments that counter GDP as a primary measure of economic success, well illustrated in this piece from The Conversation. The group of economists that officially call recessions in the Eurozone use a range of criteria to do so including unemployment figures. While they’ve technically been through a recession based on GDP figures, a lot of commentary around it leans very heavily on the use of the term “technical recession” as unemployment is at its lowest level since before the creation of the euro in 1999.
Food prices remain high
Prolonged recessions are undeniably painful but I do wonder whether the average person has grown a bit indifferent to finding out whether we’re in a short, shallow or technical recession, given it feels like we’ve been waiting for this penny to drop for a while. Treasury predicted we’d avoid recession in May. All well and good but we all know what we’re paying for food these days. Officially, food prices were 12.1% higher in May 2023 than they were in May 2022, according to figures released by Stats NZ yesterday, although there are some signs prices may ease later this year.
IMF issues report card signalling a further slowing of the economy
Yesterday the International Monetary Fund (IMF) delivered its report on New Zealand, saying that it expected the economy to slow further and possibly fall into recession, with growth of about 1% for the next couple of years. Quick explainer for the unfamiliar on exactly who the IMF are here. They visit New Zealand each year and issue something of a report card. interest.co.nz’s Dan Brunskill has a good summary of this year’s report which included calls to reform the tax system, freeze minimum wage, spend less money and build more houses. It’s pretty similar to last year’s with its call for a capital gains tax, but there’s more emphasis on the government needing to keep spending in check. The IMF also issued a warning about the risks posed by the high current account deficit. That’s a measure that shows that the value of the goods and services we import has exceeded the value of the products we export, or more simply, in household or personal budget speak, an indication that we’re living beyond our means.
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The bid to harvest the rural vote
Stewart Sowman-Lund spent yesterday at the Fieldays and encapsulates the political battle ground it’s become by noting that when asked whether theirs was the “party of farmers”, both prime minister Chris Hipkins and leader of the opposition Christopher Luxon said “absolutely”. Hipkins reiterated the government’s commitment to He Waka Eke Noa and confirmed it wasn’t going to introduce a fertiliser tax. If Fieldays fashion is up your alley, Sowman-Lund has some notes on that too. Act are out in full force at Fieldays and have the former president of Federated Farmers, Andrew Hoggard, as a candidate and actual farmer, Mark Cameron, in parliament. Leader David Seymour will be there today to launch the party’s agricultural policy. See below for a masssive feature write from Toby Manhire on the party’s resurgence.
Te Pūkenga restructure details emerge
As Stuff’s Gianina Schwanecke reports, details have emerged of the proposed restructure at Te Pūkenga, the national polytechnic. Staff are feeling “shocked” and “gutted” after hundreds found out their roles have been cut. They still don’t know how many jobs might be left to reapply for. In a Nine to Noon interview in March, Te Pūkenga CEO Peter Winder indicated the number of jobs on the line was “a number that will be more than 200 and less than a thousand, considerably less than a thousand.” Polytech staff consulted an employment lawyer after that on the basis of hearing about the job losses on live radio, before being consulted.
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Click and collect
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Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.
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Once considered a laughing stock, the Act party is now stronger than ever is — Toby Manhire speaks to those involved in its resurgence. In case you didn’t grow up in the Waikato, Stewart Sowman-Lund explains what the Fieldays is and why it’s a fixture in the political calendar. Alex Casey talks to the members of the unofficial fan club of Christchurch's most beloved and expensive supermarket. Modern blockbusters are increasingly ‘to be continued’ and Chris Schulz wants this trend sent straight in the bin. Across Auckland, transport improvements are being debated to death but Ben Gracewood writes that one decision out west shows it doesn’t have to be this way.
Sporting snippets
Michael Bracewell ruled out of Cricket World Cup
Sportswear and equipment designed specifically for women — unbelievable common sense or marketing ploy?
Ahead of the Ashes test cricket series, three cricket writers go all on the data to unpack the impact of Bazball
Bathroom or garage for your classified documents?
I should not have found all this as funny as I did but I was trying to imagine the meetings in which these stories were pitched or assigned. In response to House speaker, Kevin McCarthy, defending Donald Trump’s storage of classified documents in his Mar-a-Lago bathroom, The Guardian have consulted a range of construction and home improvement professionals on whether a bathroom or garage (Biden’s preferred file storage solution) is the safest option for this particular purpose. The Washington Post have gone all in on the chandelier in Trump’s bathroom, consulting designers and an epidemiologist on aesthetic and hygienic matters. News you can use if you have a pile of classified documents or are contemplating a chandelier in the loo.
