Wednesday, June 16, 2021

Mike Hosking: GDP figure will expose our stagnant economy


Several things about our GDP number this week.

One, its absurd we are waiting till now to get details about the economy from January, February, and March. The irony being we are about to end the second quarter of the year and we haven’t even got the statistics for the first.

Two, just what is it going to be? The thing almost everyone is agreed upon is it’s not going to be very good. It’ll either be a bit above zero or a bit below it.

If it’s below it that’s a recession, given the last quarter of last year was below zero as well. If that’s the case, the government should be hanging their heads in shame.

But instead, they’ll say something like its historical detail we’ve moved on and our economy is off and running – which it isn’t – but they’ll worry about coming up with an excuse for that another day.

If it’s above zero, they will talk about growth and freedoms and a bright and prosperous tomorrow.

What allows them to get away with all this flannel is sadly too many people don’t know nor care about things like GDP?  

A lot of peoples economic outlook, more is the pity, is limited to their own personal circumstances.

If you have a job, if you pay the mortgage, if you have a holiday, you’re ok, therefore the economy is fine.

If you work at Marsden Point or the Kawerau Mill, not so much.

If you’re running a cafĂ© or restaurant and you’re shrinking your hours because you can’t get the people you need, not so much.

If you’re selling a car or a jet ski or clothes, you’re economy has never been better.

But that’s GDP; it’s the culmination of everything. It’s everyone’s good news story and their bad news story and every story in between, and in that is your number. It’s the complete picture.

And the complete picture, whether it’s a bit above zero or a bit below zero is hopeless

For want of a better word, it’s stagnant. That’s our economy: stagnant, going nowhere. All that Covid freedom and for what?

Stagnancy and debt. That’s what’s preventing it being truly awful: $100 billion of debt, the false inflator, the fiscal opiate.

So have a look at the GDP figure when it comes out, and then have a look at the number for other countries that we do business with, and you will note theirs tends to be bigger. In say Australia’s case it was 3.1, so a lot bigger.

Ask yourself why. Economic credibility is the answer: they have it, we don’t. As always, numbers don’t lie. 

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.

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