Editorial: Are we talking ourselves into a Vibecession?

There are some bright spots despite an overall downbeat vibe. Photo / Alan Gibson NZH 4may06 - WAIT FOR IT: Dark storm clouds cast a shadow over the sun and bring a threatening glow to Bay of Plenty skies as heavy rain continues to hit many parts of the North Island.

OPINION

Inflation data out this week shows the pace at which prices are rising has slowed and is now trending downwards.

That’s a small win in what appears to be a grim-feeling winter. Consumer confidence has picked up a little bit but remains well below the average.

The weather has been largely awful all year, particularly for those in the north half of the North Island and a mass shooting in Auckland will unsettle those who are already worried about crime.

New Zealand appears to be talking itself into a Vibecession. It was coined last year by US social media influencer Kyla Scanlon to refer to the general feeling that the country was about to enter a recession even though economic data continued to show signs of growth.

This week US media including Bloomberg and the Washington Post reported that the Vibecession appeared to be over for America.

The US economy has tackled high inflation and it’s now back to 3 per cent, economic growth is seen as solid and recession risks are fading.

Consumers are starting to feel more confident. Petrol prices are back to more normal levels and the housing market has stabilised.

New Zealand entered a technical recession in March with a decline of 0.1 per cent for the quarter following a drop in GDP of -0.7 per cent in the December quarter.

But we may no longer be in a recession at the moment. The official data for the June quarter won’t be released until September 21.

Yet you wouldn’t know that from the way many people are feeling. Cost-of-living pressures are weighing heavily on people and businesses are feeling it as people cut back on spending.

Grey wintry skies and rain aren’t helping.

But there are some bright spots that Kiwis should keep in mind. Unemployment remains very low at 3.4 per cent.

That means while workers may be feeling a squeeze on their pockets in the main people are coping because they still have their jobs.

Our net wealth has fallen but remains above pre-pandemic levels at $2.2 trillion. The housing market appears to be stabilising after a period of falling. Despite the fall in house prices, they remain above where they were before Covid.

Those who can afford to travel are doing so and likewise visitors are coming back to New Zealand including those here for the Fifa World Cup.

New Zealanders are generally a welcoming bunch when it comes to tourists but we need to also give a sense that things are not all bad so that visitors return to their home country and spread the message that New Zealand is on the up.

Tourism’s recovery is key to New Zealand avoiding a double-dip recession which some economists are forecasting for the tail-end of this year and the start of 2024.

Here’s hoping the start of Spring will also lift the vibe in New Zealand and help stop Kiwis from talking themselves into a worse position.

Whoever wins, getting the election behind us might also help reset our outlook.