Christoph Schumacher: GDPLive - How are we tracking?

Waiting for the release of the official Gross Domestic Product (GDP) figures has become more exciting since I launched GDPLive. It is like watching the lotto draw when the numbers drop, and you keep checking your ticket.

GDPLive (gdplive.net) uses large amounts of daily transaction data from New Zealand companies and a machine-learning algorithm to track GDP in real-time for the country, regions and various business sectors.

Christoph Schumacher: What does Govt being 'more of a friend than foe' to RBNZ mean?

In my last column, I used a puzzling proverb to show that we can’t simultaneously have low inflation and cheap money. Today, I use the equally puzzling comment made by Adrian Orr in the OCR announcement that the government is ‘more of a friend than foe’ to explore the relationship between our government and the Reserve Bank.

The government owns the RBNZ, but since 1989, it has operated as an independent body. As such, the RBNZ answers directly to Parliament, and the RBNZ governor is directly accountable for any failure to achieve the price stability and inflation objectives.

Christoph Schumacher: When the OCR misses the mark

Annual inflation has fallen from 7.2% in the fourth quarter of 2022 to 6.7% in the first quarter of 2023. On the surface, this is good news. We seem to have passed the inflation peak, and the Reserve Bank’s OCR increase to 5.25% appears to be doing the trick. But hold on. Does this mean inflation is now under control, and the OCR is doing what it is supposed to do?

Christoph Schumacher: How Okun's law affects New Zealand

So much has happened in the past few weeks that I am spoiled for choice of topics to discuss. In the US, two banks collapsed, causing the biggest bank failures since the GFC. This had a ripple effect that toppled Credit Suisse. Swiss banking giant UBS came to the rescue, which may have prevented the evolving crisis from exploding, but the takeover created a new set of potential problems – Switzerland now has a bank with a balance sheet twice the country’s GDP.

Meanwhile, banks in New Zealand made record before-tax profits of $8.83 billion in 2022, which is not a bad thing, as we do want our banks to be profitable (when banks collapse, economies struggle). Yet, calls for a Commerce Commission inquiry are being heard, not because their return on equity seems high (the opposite is true) but because their returns are much higher than other banks worldwide.

Christoph Schumacher: Real-Time inflation and optimal OCR tracker launch

Inflation is the hottest topic in economics right now, with economic powerhouses like the US, Germany or UK about to hit (or have already reached) double figures. Even our once-called ‘rock-solid’ economy is trending in this direction, yet our reserve bank seems reluctant to take the necessary monetary policy measures.

Part of the uncertainty and anxiety caused by inflation is the lack of real-time values. We know that at the end of the September quarter, NZ inflation was 7.2%. The RBNZ suggested that we have reached the peak and inflation will fall soon, but unless we know today’s value, we have no idea if this is true.