Thursday, November 4, 2021

Mike Hosking: Unemployment number doesn't tell whole story


There is a lot of falseness about the economy. 

The jobless rate was excellent. But it looks better because we are merely soaking up the people who wanted jobs based on the fact the choice has vanished. The labour market has shrunk, the population is no longer growing, we are paddling in a smaller pool, and the pool we are paddling in is filled with $50 billion worth of printed money. 

This is why Infometrics Economist Brad Olsen is thinking we are heading for a recession. Specifically, another recession given we've already had one. 

The Government talks a lot about how good our economy is, and the sad truth is it simply isn't true. 

We entered this lockdown with a very solid bounce-back. The second quarter growth number surprised everyone. Again, it was at least partially false given the debt money flowing through the place but it did generate a 2.8% growth number. But since then, we have crashed. 

The third quarter of this year that is July, August, and September will be a negative number. In other words, all that growth built up in the first part of the year will be gone. 

Given the lockdown involves the whole country in at least Level 2, the whole country at Level 3 for a period, Waikato and Northland at 2, and Auckland still languishing, the final quarter of the year will be heavily dented as well.  

That is two consecutive quarters of going backwards. That’s a recession. Olsen's numbers have activity right now in the fourth quarter down 10%. 

They guess that the bounce-back won't be like last time. The weariness, the lack of cash reserves, and the ongoing uncertainty will have dampened, at least, some of the fizz that will have built up as we waited for freedom. 

As the Prime Minister has often said it's not how you start, it's how you end. How are we ending? At least, we're ending the year is in a recession. 

Even with the early numbers being good, if we end up with a calendar year zero figure, we'll be lucky. Remember this is in a region, the Asia Pacific, that will grow at least 6% and a global economy the IMF says will grow 5.9%.  

It's a world that economically is leaving us behind.

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


Terry Morrissey said...

The only sector to be performing really well is the primary producers. Thats only because they cannot be locked down by a government that is out of control. But I'm sure Labour will find a way to screw them as well.

Ian P said...

To all you people out there who ignorantly knock farming, New Zealand would be in very deep whatsit by now if it weren't for this sector. They perform vital, honorable, and tangible work. Take careful note Labour and Greens.

RRB said...

Every student should be taught, Government mismanagement cause inflation, the slowest learners of that fact are politicians.

Unknown said...

I believe we are missing the point! The current socialist/communist agenda requires the removal of capitalism. Covid lockdowns has produced the perfect guise for this to happen. More people dependant on government handouts equals more people supporting a generous government and more votes to keep them in power. The transition to Communism is well under way and we still won't admit that we have mis-judged our comrade PM. Too late! We now have a battle for survival on our hands! The end of democracy, an enormous debt burden, mass unemployment and a separatist institution.