So the true position is finally being revealed. The economy started to turn downwards at the beginning of the year. This is a ‘surprise’ to RNZ and a ‘puzzle’ to Stuff, but it is no surprise to most of us. We have been in a decline for months…most likely since the end of last year.
Agricultural exports are down due to a softening of demand. Inflation is at 7%, pushing up the price of basic household goods. Petrol is well over $3 a litre. The construction industry is suffering immensely. Retail is struggling. Interest rates are rising. Nowhere in the economy are things looking good. And yet… we have been told, time and time again, that everything in the economic garden is rosy, and we are doing just fine.
Until now. And today, it is a ‘surprise’.
We learnt in April that inflation had ballooned out to a 31-year high of 6.9% during the quarter. And we found out in May that official unemployment had remained at a recent ‘record’ low of 3.2%. But we now also know that GDP, the main measure of economic activity, fell 0.2% during the quarter, confounding the Reserve Bank’s May forecast that it had instead risen 0.7%.
The Reserve Bank’s forecasts were off. That is hardly a ‘surprise’. Did they really think that all that printed money would not have an adverse effect on the economy? Really? Did they really think that we would merrily continue to sell everything we produce when supply chains are badly affected and one of our largest trading partners (China) has been in stringent lockdown for months?
Adrian Orr has been focusing too much on the Maorification of the Reserve Bank and not on the economic effects of their actions. His stewardship of the bank has been nothing short of a disgrace.
This is also what happens when you have a bought-and-paid-for media. They have not asked the right questions. This economic data has been there all along, but no one went looking for it. Now Stuff refers to it as the ‘lost piece of the puzzle’, as if we didn’t know that things were deteriorating rapidly.
It is often hard to understand when a government like this one does reckless things that are certain to have a bad effect on the economy that we don’t see the consequences sooner. We never do. The economy is like a juggernaut: it takes a long time to turn things around. But now that we are seeing the results of several years of blind stupidity by the current Government. Understand that this is just the beginning of a very long downwards slide.
But… it is all the fault of the war in Ukraine. It is all the fault of supply chain issues. It’s the pandemic. It is the Fed’s fault. Let’s blame the Russians. What about the Chinese? Hang on – what about the British sending refugees to Rwanda? Or Brendon McCullum coaching the English cricket team? They are all to blame. Grant Robertson always has an excuse – a reason why we should not blame the government. Nothing is ever their fault.
This government treats us all as if we are stupid. Hardly surprising when Jacinda spends all her time with school pupils. They probably believe her.
I don’t.
The technical definition of a recession is two quarters of GDP decline, and economists are expecting Stats NZ will report in September that economic activity increased in the three months to the end of June.
In fact, some think the second-quarter GDP number could get a decent “bounce” from activity that was deferred in the first quarter due to Omicron.
Or not, as the case may be.
Also, while another GDP decline in the June quarter would put the country into a technical recession, it is questionable whether anyone could call that a ‘real recession’ given that we would have spent half of it with unemployment at that record low rate of 3.2%.
Stuff
Do you see how Stuff is deliberately playing it down, saying that any recession we have would not be a ‘real’ recession, even if it met the definition of two consecutive quarters with declining GDP? Why are they deliberately understating the true situation here, telling us all not to worry?
We are not children hiding under the bed. We need to prepare ourselves for the rocky times ahead.
Stuff‘s claim that the low unemployment rate is our saviour overlooks a couple of important points. The first, as I have said before, is the fact that our unemployment figures are kept falsely low by a very narrow definition of ‘unemployed’, which places most people currently receiving benefits outside the definition. But it also overlooks the fact that staff shortages, as we are now seeing, can have as adverse an effect on the economy as high unemployment. If you cannot get staff, you cannot operate to your ideal level. Across the entire country, in all sectors, staff shortages are a major problem.
Must be those damned Russians again.
Prepare yourselves for some bad times ahead. Forewarned is forearmed, which is why it is almost criminal of the government-funded media to play down the current situation. Fuel prices are still increasing – higher now than when Ardern’s Government removed six cents of fuel tax that still has to go back onto the fuel price – and fuel prices affect everything. My own observations indicate that inflation is considerably higher than seven per cent and now GDP is declining.
People on low incomes will really be hurting by now. But don’t worry. Grant has got this, and none of it is his fault anyway. Must be those Russians.