Latest / Best of Business / Liam Dann: NZ Herald business editor at large on GDP dropping 1 percent in the September quarter

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Liam Dann: NZ Herald business editor at large on GDP dropping 1 percent in the September quarter · Best of Business

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  Speaker 1: You're listening to a podcast from News talks'b follow this
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  Speaker 1: and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: And we're going to our business man, Liam Dan Lillam.
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  Speaker 2: Good to have you on this show, GDP. This is
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  Speaker 2: a big story today.
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  Speaker 3: We've been talking about it all afternoon, as I'm sure
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  Speaker 3: you've been writing about it all day. So one percent
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  Speaker 3: down for quarter three and then we had a revised
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  Speaker 3: quarter two number one point one.
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  Speaker 4: Yeah, so it's actually a weird one. You know, the
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  Speaker 4: more you look at it, it looked, you know, the
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  Speaker 4: initial reaction was, holy heck, this is really ugly, and
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  Speaker 4: it was. But then you look at the revisions and
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  Speaker 4: so it turns out that in twenty twenty three we
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  Speaker 4: never had a recession according.
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  Speaker 5: To these numbers. And then actually.
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  Speaker 4: The economy, according to the economists some reading is slightly
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  Speaker 4: bigger than across the last two years, has grown slightly
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  Speaker 4: more than originally forecast and then was forecast save and
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  Speaker 4: in the June numbers. So it is like it's a
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  Speaker 4: very gloomy thing to happen. Right before Christmas, we had
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  Speaker 4: that awful half year economic update from the government and
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  Speaker 4: Treasury as well. But I just think it's important at
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  Speaker 4: this point in time to put it in context and go, hey,
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  Speaker 4: this has already happened, so this is historic. It really
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  Speaker 4: just tells us that how bad it felt in the
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  Speaker 4: middle of the year, you know, and lines up a
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  Speaker 4: bit more with the anecdotes and about about how bad
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  Speaker 4: things were. But it doesn't kind of change reality in
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  Speaker 4: our world. And the economists are still pretty optimistic that this.
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  Speaker 5: Was the worst of it.
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  Speaker 4: So I don't know, I might be clutching et straws
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  Speaker 4: and I'm trying to be a bit optimistic as we
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  Speaker 4: hit into Christmas.
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  Speaker 2: Well we certainly need it.
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  Speaker 3: I mean, the number was quite shocking, and the revised number,
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  Speaker 3: you know, equally as shocking. We had Stephen Joyce on
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  Speaker 3: earlier he Reckons and he said that adrianaw has a
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  Speaker 3: lot of questions to answer now he's overcooked the correction.
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  Speaker 2: Do you agree with that?
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  Speaker 4: Well, I mean, I guess there's something that you've got
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  Speaker 4: to ask. I mean that they we were all screaming
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  Speaker 4: for inflation to be taken out. I've got to say,
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  Speaker 4: including Stephen Joyce, everyone wanted to see them really hammer inflation,
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  Speaker 4: and so they've they've gone really hard.
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  Speaker 5: Look it May.
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  Speaker 4: It's certainly going to raise calls for some economists are
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  Speaker 4: saying we need to go seventy five basis points for
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  Speaker 4: the next cut, get it down faster. Yeah, I mean,
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  Speaker 4: I guess, I guess there's an argument there. I do
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  Speaker 4: think it is important to look at what's happened to
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  Speaker 4: these numbers and what's happening at stats n Z.
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  Speaker 5: It is a really odd one.
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  Speaker 4: You know, they've done a lot of seat, They've had
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  Speaker 4: to rework all their seasonal adjustments, and you've now got
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  Speaker 4: economists saying that the next quarter might look really strong,
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  Speaker 4: stronger than it really matches.
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  Speaker 5: Up with their real world experience.
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  Speaker 4: So I'd put a caveat around the GDP numbers for
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  Speaker 4: a little while. In fact, they always seem to be revised,
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  Speaker 4: and I try to put caveats around it, and I
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  Speaker 4: have to write the story with the horrible headline when
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  Speaker 4: it all breaks, of course, But yeah, I think we've
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  Speaker 4: got to be a bit careful.
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  Speaker 5: I use the analogy of if.
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  Speaker 4: You survive a hurricane and you thought you're surviving a
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  Speaker 4: category four hurricane, and you get through it, and then
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  Speaker 4: someone tells you you've just survived a category five hurricane.
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  Speaker 4: You know, you shouldn't really feel any worse. You should
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  Speaker 4: possibly feel a little better that you've got through it. So,
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  Speaker 4: I mean, everyone was pretty glum in the middle of
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  Speaker 4: the year, and maybe the numbers didn't seem that bad, and.
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  Speaker 5: Now we know it was that bad.
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  Speaker 4: So look, you know, fair play to guys like Joyce
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  Speaker 4: and a few other commentators who were saying that this
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  Speaker 4: is the worse since ninety one. It does appear to
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  Speaker 4: be the worse since ninety one.
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  Speaker 5: But I think, you know.
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  Speaker 4: There is some cause for optimism, inflation under control, some
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  Speaker 4: growth coming our way. I know, there's a whole bigger
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  Speaker 4: story about actually reinventing their economy, transforming it, getting some
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  Speaker 4: productivity going, and finding some real growth. But regardless of that,
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  Speaker 4: it does look like twenty twenty five is going to
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  Speaker 4: look better. So that story hasn't changed.
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  Speaker 3: Do we not rely on on GDP figures going forward?
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  Speaker 2: Then?
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  Speaker 3: Like, how did they get the quarter two numbers so wrong?
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  Speaker 3: And the seasonally adjusted thing that you're talking about? What's
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  Speaker 3: going on there?
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  Speaker 4: Well, from what I can see, and I'm doing a
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  Speaker 4: lot of reading, it's there was a lot of COVID
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  Speaker 4: really throughout all the season. They revised they do a
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  Speaker 4: revision of methodology in the third Every third quarter there's
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  Speaker 4: a big revision of methodology, and that's good practice. You
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  Speaker 4: want to make sure it's all it's all good. But
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  Speaker 4: they've found that there's seasonal there's seasonal adjustments that they
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  Speaker 4: do to try and keep it all and tick. We're out,
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  Speaker 4: and they've had to redo those quite substantially. It's it's
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  Speaker 4: kind of the case that they've kind of like, they
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  Speaker 4: know how much the economy has grown, but how they
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  Speaker 4: are proportionate across each quarter has been out of whack.
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  Speaker 4: And so now you have the data for that middle
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  Speaker 4: of the year looking more like what people were seeing,
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  Speaker 4: and things like the production of manufacturing statistics and some
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  Speaker 4: of that minuted data looked really grim. And then so
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  Speaker 4: now these GDP numbers match that. So they're sort of
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  Speaker 4: starting to get it back in line, I hope, but
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  Speaker 4: it does does remind you that some of these things.
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  Speaker 4: First of all, GDP is a very tough thing to measure.
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  Speaker 4: It's every single bit of action that happens in the economy.
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  Speaker 4: Everything we make, everything we do, everything we spend. So
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  Speaker 4: that's always tough, and it's been particularly tough in the
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  Speaker 4: past two or three years. One would hope that that
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  Speaker 4: we can rely on them for the trend, but I
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  Speaker 4: would always say there's a caveat on that initial number
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  Speaker 4: when it comes out, and be a bit wary of,
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  Speaker 4: you know, worrying too much about technical recessions. We know
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  Speaker 4: that we're in a you know, we know when we're
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  Speaker 4: in a downturn. We know when things are going bad,
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  Speaker 4: and look at look at measures like the jobs lost
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  Speaker 4: and the businesses closing down, all that sort of stuff.
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  Speaker 4: If you want to see real hard data and what's
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  Speaker 4: happening in the real.
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  Speaker 3: World, well just walk down the street in Main Street.
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  Speaker 3: You can see it too, Liam, can't you? Thank you
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  Speaker 3: very much for that run down limb down You still
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  Speaker 3: un Herald Business editor at Large.
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