Tuesday, November 24, 2020

Kate Hawkesby: Will this spending boom last?


The figures yesterday on retail sales were remarkable weren’t they?

As an article in the Herald pointed out, we knew anecdotally there were big spend ups happening on home improvements and new furniture, but the stats now bear that out.

The retails sales figures released yesterday showed the biggest quarterly rise in 25 years.

So when we heard, saw, and thought people were out shopping up a storm, we were right, they were. We clearly went nuts after being released from lockdown .. we clearly saw the writing on the wall with the borders and thought, stuff it, I’ll spend up large at home.

One economist reckons spending on things for our homes was boosted by the fact we were spending so much time in them. I know we fall into that category.. having done a lockdown at home we looked around and thought hmmmm, need to renovate, and before we knew it builders were swinging hammers, sparkies were doing lights, plumbers and painters descended.. it was all on. Would we have done all that had we not spent so much time locked down staring at the same four walls for weeks on end? Maybe not.

So some good did come from all of that for those building and retail industries.

The grocery sector though, which boomed during lockdown when all the cafes were closed and we had to stay home.. suffered a bit once we were freed from lockdown.. and obviously began eating out again, grocery spending fell 2.9 percent at that point.

So September quarter figures were great news for the retailers.. question is .. can the boom time last?

Well according to an economist spoken to by the Herald..”early signs suggested.. ‘the strong pace of retail momentum has continued into the December quarter’. He says, "The resurgent housing market, continued nest-building by households.. and resilient domestic demand should keep some tills ringing.”

But ringing by how much? Because as the article points out, the headwinds.. are rising joblessness, reduced numbers of international tourists, and a still uncertain economic outlook.

So does this sugar rush to buy houses, cars, renovate the place, hit the shops.. continue? Or cool?

With Christmas around the corner you’d like to think the spend up lasts at least another month or two.. but I do wonder if .. as the credit card bills start to roll in.. we start to sober up a bit. Whether we start to look at a new year with new expenses and budgets.. and the belt tightening kicks in. Whether our current confidence and mood at being Covid and lockdown free can sustain our spending through to next year.. or whether a New Year also sees the dawning of a new reality?

Kate Hawkesby is a political broadcaster on Newstalk ZB - her articles can be seen HERE.

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