The Reserve Bank has cut the official cash rate by 0.5%. That sounds great. But banks only cut interest rates that much when the economy is in trouble - and not when things are going well. This cut is a sign of economic weakness, not strength. A 😄🧵 We are only just now reaching the point where our interest rates are stimulatory (I.e below the neutral rate). That means the cuts to date have likely done little to stimulate growth. It takes about a year for an interest rate cut to translate to real world

Business NZ looks at the state of the economy through two measures – PMI (Performance of Manufacturing Index) and PSI (Performance of Services Index). If they score above 50 – the sectors are growing. Data today shows them at 47.5 and 44. A 🧵 The PMI fell 5.8 points to 47.5. This was the largest single month decline in its 20+ year history. New Orders (45.3) Employment (45.7) and Production (48.7) led the fall. Finished stocks (51.3) rose suggesting that companies are struggling to sell businessnz.org.nz/pmi/back-in-th…

I saw the below and thought that's a heck of a claim. So let's examine how National got here. A 🧵 This ad comes from a Ministerial Press Release . It states "Police data shows that violent crime has fallen". In the footnotes it then says "Violent crime is not a category of data that Police tracks". Both these things can't be true.beehive.govt.nz/release/violen…

Stats NZ measures child poverty on three measures – before housing costs, after housing costs, and material poverty. All three central estimates of poverty rose last year. This is the second year in a row in which the data is heading in the wrong direction. A 🧵 Stats NZ now estimates that 1 in 7 children live in households where they experience material poverty – 156,000. That means that households report missing out on essentials, living in cold and damp housing, because of the cost. That is the highest number since 2015

Stats NZ produced three new sets of data today - showing the headwinds facing the economy. Housing consents, employment data, and business numbers. All three show declines. A 🧵 Starting with the good news. The number of filled jobs rose just short of 6,000 in November 2024. With falls in primary and goods producing jobs being offset by growth in service-sector jobs. The bad news - its still 29,895 fewer filled jobs than November last year

Welcome to more "vibes based analysis" on 90 day trials from the EMA. Zero hard data provided within this oped supports the use of 90 day trials, nor is their any mention of their potential misuse. What does the real evidence say? A 🧵 nzherald.co.nz/business/have-… The oped claims they support employment. Motu Research found "“no evidence that the ability to use trial periods significantly increases firms’ overall hiring" in their work for the Treasury. They don't create jobs or employment opportunities treasury.govt.nz/sites/default/…

Its the last Sunday before Christmas, so as a special treat to myself I thought that I would look over the last 3 sets of Economic and Fiscal Updates from the Government. That gives us a sense of change over time, and if the government's current approach is working. A looong 🧵 First, GDP - Treasury Forecasts for GDP Growth have fallen every time they have updated them since the election. We are now a year behind where things were forecast to be in October 2023 – as you can see on the chart below – we have had no growth for a year.

The Minister of Finance and the Treasury released its Half Year Economic and Fiscal Update today, and with it – its ‘plan’ for the Budget in 2025 in the Budget Policy Statement. The indicators show very clearly that it’s not working for anyone. A long thread (apologies) From a fiscal perspective, the government books are deeper in the red. In Treasury language they say “All key fiscal indicators are expected to be weaker across all years compared to the Budget Update”. That means more debt and OBEGAL doesn’t come back into surplus

It takes a lot to get 15 Economists to agree on anything - so the fact that we have all signed up to this letter is a clear sign of the danger we are in. Having promised to get the country back, we are needlessly exacerbating the current recession. A 🧵 img.scoop.co.nz/media/pdfs/241… Our fiscal policy (cuts) is exacerbating the recession. Economic growth is behind forecast, and unemployment is rising rapidly. Today Treasury said "The latest evidence points to a likely further downgrade to the Treasury’s economic and fiscal forecasts" treasury.govt.nz/publications/m…

Unemployment data out today - it rose to 4.8%. Many people might be trying to tell you that's better than expected - and so things are okay. A closer look at the data shows otherwise. There are 29,000 more people unemployed since this government took office. A 🧵 Unemployment for young people is now a real concern. 20% of 15-19 year olds are unemployed. 8.4% of all 20-24 year olds. Maori unemployment is 9.2% & Pacific Peoples unemployment is 9.9%. Unemployment in in Auckland is now 5.2%. Some communities are increasingly being left behind

. @Amelia__Wade has a great story about the scale of cuts required if the government is to achieve its spending targets. I thought that I might add a little more information to that article. A 🧵 waikatotimes.co.nz/politics/35042… People have been told that public sector pay is growing fast, and is out of control. In fact, public sector pay on average hasn't recovered from the COVID cost of living crisis. That's mainly because of the 2021 Workforce Policy Statement, where pay was held for many.

GDP data out today shows the economy grew by just 0.2% annually - showing stalled growth and weak demand. On a per capita basis, GDP fell by 2.4%. There has now been 6 successive quarters of per capita decline, the worst since the GFC. The growth figure is camouflaging weakness. Business investment fell 0.5% overall, led by a decline in plant, machinery and equipment. Households annual consumption of durable and non-durable goods fell 2.6%. This is a very weak set of accounts. Annual GDP growth is worse than Oz, Canada, EU, US, and OECD average of 1.7%

Joe Biden said, “Don’t tell me what you value, show me your budget and I’ll tell you what you value”. This Budget shows the values of this Government - ideological wants before real need. This Budget fails the most important test going, will it help deliver a better Aotearoa. A🧵 Nicola Willis said that her tax package would not “require any additional borrowing”. Treasury says the government will now borrow an extra $17.1bn by 2028. Tax cuts cost nearly $10bn. Without cuts, borrowing would be lower. Future taxpayers are going to pay for tax cuts today

The CTU has taken a look at the costs of the Cook Strait Ferry upgrade (sometimes called the IReX Project). It's a huge deal, with a huge price tag. The recent decision by the Coalition Government to end it however should be viewed against the other decisions they have made. A 🧵 Like every other infrastructure project over the past decade IReX has increased in cost significantly - now up to $3 billion. This is around the same cost, albeit over 5 years, as the landlord tax cuts so it would be tempting to draw a straight line between these policies.

I have had a quick go at costing the current coalition negotiation, and the options open to NZ First and the National Party. it’s not an easy task that is ahead of them, and they face some tough decision. A thread…
nzherald.co.nz/nz/craig-renne… Firstly, it’s inconceivable that NZ First will allow foriegn buyers back into the NZ housing market. That puts a $3bn hole in the tax plan. Filling the gap could be achieved if they agreed to double the cuts to public services to 17%. That not politically or practically possible.

For the true Treasury cognoscenti the Financial Statements of the Government for 2023 were provided today. It provides the real and audited state of the Crowns accounts. They are largely as expected, but a few things may be of interest. A short thread... Overall the deficit (OBEGAL) was $588m lower than forecast at PREFU last month. Revenue was $533m higher and spending was pretty much on target (-$51m). Net Debt was $71.4bn - as advertised last month, and our Net Worth (assets minus liabilities) was $191.4bn.

Fiscal Plans - the good, the bad, and the ugly. With both National and Labour now having released fiscal plans we can see how the decisions of the 2 main political parties add up. It’s a story of the good, the bad & the ugly – and it’s not all one-sided. A long 🧵(apologies) First the good news. There aren't arithmetical errors in either plan. National has given themselves an extra fiscal year, meaning $3bn more than Labour has given itself. To compare numbers, you should remove $3bn from National’s “Unallocated Allowances” to get a true comparison.

Ahead of tomorrow's @NZQandA Finance Debate, I thought that I should dig around for how the NZ economy is doing. A few charts here on the current state of play against the countries that we usually compare ourselves to. All data here is from the OECD, Stats NZ, and IMF. Last quarter, our GDP growth of 0.9% was very impressive in comparison to our peers - only Japan beating us in terms of GDP growth.

Treasury opened the government books today, showing us their latest forecasts for the economy and govt. spending. The economy is forecast to remain resilient, with an average GDP growth of 2.6% across the next four years. But there are also some challenges in the data. A🧵 Most of the main economic indicators are largely as advertised at Budget in May. Unemployment peaks at 5.4% before falling to 4.6%. Inflation falls to 2.5% by June 2025. Wages rise faster than inflation. Overall, this is better than many had feared would be the case

National has identified nearly $2.5bn in cuts to public spending. It calls this "Savings from Back Office Bureaucracy". However an analysis from the CTU has identified many areas that Kiwis would consider front-line and essential. A thread... Nationals numbers come from Budget 23 data
This breaks the departmental spending down so we can see the areas in which government spending is taking place. This also allows us to see what National has in its scope for the cuts programme.budget.govt.nz/budget/2023/es…

NZ is now in a technical recession - but only just - with GDP declining by -0.1%. That's equivalent to a fall of $45m in a $69.8bn economy, or about 1 minute of output per day across the quarter. Essentially, its well within the margin of error for GDP estimates GDP data was driven in part by the impact of Cyclone Gabrielle and the poor weather earlier this year. If we exclude those one-off effects then it would likely have been flat or positive. If we look at GDP on an annual basis it was 2.9% higher than last year.