Latest / Best of Business / Liam Dann: NZ Herald business editor at large on GDP dropping 0.2 percent for the second quarter of 2024

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Liam Dann: NZ Herald business editor at large on GDP dropping 0.2 percent for the second quarter of 2024 · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks'd be follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio Kiwi.
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  Speaker 2: Banks chief economist Jared Kerr reckons the Reserve Bank needs
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  Speaker 2: to speed up the rate cuts to cure our sick economy. GDP,
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  Speaker 2: as we know, went back zero point two percent in
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  Speaker 2: the second quarter of the year, and per capita we
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  Speaker 2: went back two point seven percent year on year. Liam
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  Speaker 2: dan is The Herald's Business editor at large and with us. Now, Hey, Liam,
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  Speaker 2: I'm trying to find the good stuff in this, because
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  Speaker 2: there is actually good stuff in this, and the good
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  Speaker 2: stuff is it's bad, but not as bad as we thought.
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  Speaker 3: Yeah, that's right, you'd think. I mean this is I
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  Speaker 3: feel like we're all pretty down on the economy right now.
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  Speaker 3: There was no way we were going to receive this. Well, yeah,
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  Speaker 3: the per capita stuff's terrible, but all of it was
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  Speaker 3: slightly better than expected. But the response hasn't been a horay,
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  Speaker 3: it's better than expected, and I think it's really oh,
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  Speaker 3: you know, this is grimm and.
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  Speaker 2: Well it's like it's like being told you're going to
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  Speaker 2: get six paddles instead of twelve.
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  Speaker 3: Right, yeah, and then of course they doubt that. Actually
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  Speaker 3: it was a notch worse than the first order. So
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  Speaker 3: GDP is a funny thing to count. It's a very
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  Speaker 3: difficult thing to count, and it often has revisions, so
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  Speaker 3: you know, this could be revised down. And you had
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  Speaker 3: Brad Olsen saying, well, actually it could just mean that
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  Speaker 3: it's worse than the third quarter, you know, so that
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  Speaker 3: you know, look any outside there, well it might be
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  Speaker 3: you know. The negative response generally is just that nobody
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  Speaker 3: thinks that it's going to be such good news that
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  Speaker 3: the Reserve Bank stops cutting interest rates, that's going to
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  Speaker 3: keep happening. And then it's a pretty lively debate, as
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  Speaker 3: you alluded to with Jared Kerr and a few other
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  Speaker 3: people around whether they go fifty base.
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  Speaker 2: They're going fifty what if the feet can do it when.
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  Speaker 3: I can't, Well, yeah, we still we don't want to
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  Speaker 3: forget about inflation. That's you know, yes, it still exists.
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  Speaker 3: I think they probably can actually, because I think there's
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  Speaker 3: some other things there that suggest that the economy is
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  Speaker 3: going to be in for a rough ride for a
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  Speaker 3: lot longer, and that is things like how fast, which
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  Speaker 3: I think I talked about last week, How fast immigration
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  Speaker 3: is coming off, and as soon as you have fewer
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  Speaker 3: people coming into the country, it'll solve the per capita
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  Speaker 3: GDP problem. Yes, the mess. You're not going to pump
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  Speaker 3: us up a no, No, that's right.
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  Speaker 2: Tell me so the triple the triple deprocession is over now,
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  Speaker 2: it's just a double deprocession.
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  Speaker 1: No.
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  Speaker 3: Technically, if we're talking about technical recession where we go
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  Speaker 3: two quarters and the economists are saying, everyone's saying, don't
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  Speaker 3: worry about that, it's all recessionary, but it's the quarter
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  Speaker 3: where in now the third quarter, the reserve banks thinks
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  Speaker 3: that will be negative too, so that the Gune quarter
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  Speaker 3: in this.
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  Speaker 2: One advised the second recession to not be a recession
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  Speaker 2: because one of the quarters got lifted up.
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  Speaker 3: Again, you've got marginal about zero. I mean, yeah, okay,
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  Speaker 3: So basically, I think even the economists are saying, but
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  Speaker 3: let's not.
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  Speaker 2: Talk about that because it's technical. The fact of the
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  Speaker 2: matter is, would you agree with Jared Kerr that we
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  Speaker 2: have basically been in recession for two years?
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  Speaker 3: Yeah, it feels like recession, but it feels like we've
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  Speaker 3: been going backwards for two years. And that's what matters.
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  Speaker 3: It's how people feel about about the economy generally, Yeah, do.
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  Speaker 1: You want to? Do you want to?
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  Speaker 2: I can't believe I'm doing this to you. You heard
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  Speaker 2: the huddle, you heard Ali's argument about happiness. Explain to
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  Speaker 2: me where you stand on this.
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  Speaker 3: Yeah. So she had a point that GDP is and everything,
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  Speaker 3: and they have discovered that there's a limit to how
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  Speaker 3: happy GDP can make you. So the richest countries in
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  Speaker 3: the world aren't necessarily the happiest. Yes, certainly, there aren't
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  Speaker 3: many poorer countries. The poorest countries out in the top
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  Speaker 3: of that list, but New Zealand ranks very highly. We're
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  Speaker 3: up near Switzerland in terms of the happiness index. What
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  Speaker 3: happens is that it's just diminishing returns. So if you've
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  Speaker 3: got no TV and you get a TV, you're much
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  Speaker 3: happier than you were. But if you get if you
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  Speaker 3: already have a pretty big TV and you get a
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  Speaker 3: slightly bigger TV, it doesn't make you that much happier.
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  Speaker 3: At least you're a little bit happier. So there's diminishing
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  Speaker 3: returns around happiness. And it really is about the direction
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  Speaker 3: of travel. So the US and China right now they
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  Speaker 3: start going backwards and they feel very unhappy, even though
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  Speaker 3: they're richer than some other countries.
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  Speaker 2: Because if you have a TV and then you get
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  Speaker 2: a smaller TV, you are not going to be as happy.
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  Speaker 3: Well, then you're really unhappy, yeah, or you can't go
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  Speaker 3: on holiday this year. So generally we react to the
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  Speaker 3: direction of travel and economy, and on that basis, the
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  Speaker 3: last two years have pretty much sucked for New Zealand.
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  Speaker 2: Yes, very unhappy. Thank you for that. Thanks for explaining
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  Speaker 2: that to us. Liam appreciated. Liam Dan the Herald's Business
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  Speaker 2: editor at large.
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