Liam Dann: The economic results are in pre-election, have you made up your mind?

Those hoping for a definitive verdict of how good, bad or ugly things are out there may find the results a bit disappointing.

OPINION

Have you made up your mind yet?

With just under three weeks to go until the election, we have had just about all the big economic data we’re going to get.

But for those hoping for a definitive verdict of how good, bad or ugly things are out there, the results might be a bit disappointing.

There’s still an OCR call coming from the Reserve Bank (on October 4) but that will just be a short statement and even economists (like those at ANZ) who believe we’ll need one more rate hike are expecting it in November.

There are some second-tier stats coming too.

We’ll get one more monthly dose of immigration, electronic card spending and food price inflation.

But Thursday’s GDP number was the last of the big ones before October 14.

Boy did that one land hard.

The fact we technically aren’t in recession, and the revisions that showed we never were, seemed to upset the political narrative on the right.

It shouldn’t have.

While GDP growth for the June quarter was a bit better than expected, the forecasts weren’t far off and the mid-year bounce-back was well signalled.

National leader Christopher Luxon’s much-used line - that New Zealand was the only country in the Asia-Pacific region in recession - always seemed a bit simplistic to me.

GDP statistics are ropey at the best of times, which these times haven’t been.

These times have been very volatile as the after-effects of the pandemic and lockdown and border closures wash through the economy.

The economy is basically tracking sideways while we wait for the impact of higher interest rates to deal with inflation.

ASB chief economist Nick Tuffley has suggested we think of it as a skipping stone, skimming along and “oscillating between shallow increases and decreases”.

We’re not sinking. We’re not soaring. We’re waiting.

Regardless of the numbers, nobody seems to be having a great time in this economic malaise.

It’s worth noting that even in the US, where economic numbers are looking much better than they do here (inflation is down below 4 per cent and economic growth has stayed strong), polls have around half of Americans still saying the economy is getting worse.

For many New Zealanders, the positive data also feels intuitively wrong.

It isn’t. We’re collecting it the same way we always have. But the numbers feel disconnected from the everyday reality of the economy.

I think that is because we are copping a triple whammy of negative economic forces as the cycle turns from one phase to the next.

We had very high inflation. It’s easing but we’re still feeling the cost of living pain of the past 18 months and there’s probably another several months of rising costs still in front of us.

Meanwhile the cure - high interest rates - is starting to hit us in the pocket, adding to the feeling (for mortgage holders at least) that we’re going backwards.

On top of that we’re worrying about recession. As it turns out we probably started worrying about it too early.

But whether you want to call it a recession, a slump or a downturn, we’re definitely in the bit where the economy faces a squeeze.

The Reserve Bank is literally squeezing the excess cash out of the economy.

Reserve Bank of New Zealand Governor Adrian Orr. Photo / Mark Mitchell

That’s expected to push the unemployment rate up. Even if we haven’t seen mass redundancies yet, companies are focusing on costs and that is adding a layer of job insecurity to the mix for Kiwis.

That’s a pretty tough mix for people to live with.

It’s certainly a hard sell for an incumbent government and provides fair winds for the opposition, whatever the official GDP numbers say.

For a government to hold power in these conditions requires rock-solid team performance and the retention of a high degree of voter trust.

They’d need a strong plausible story about the current state of the economy being temporary.

Unfortunately for Labour, the polls suggest they have fallen well short of that mark so far, and time is running out.

National is unlikely to be rattled by the lack of a technical recession.

We won’t get a verdict on whether we’ve escaped the post-pandemic economic cycle with a soft landing.

And even then we’ll probably never agree on the definition of “soft”.

For me it would be getting inflation back under 3 per cent and interest rates down without having seen unemployment rise above 5 per cent.

That would be a very good result when you consider what New Zealand has been through in the past three years.

But we may still see a recession and we’re unlikely to see strong GDP growth in a hurry. This malaise of shallow ups and downs is likely to drag on through next year.

If we get through it faster it will likely only be because global economic conditions (ie China) have turned against us as we dip harder and faster in recession.

And by recession I mean a real one. One where there is no room for debate.

I’ve heard people complaining that what we’ve been through in the past year feels like a recession regardless of what the numbers say.

I’m not saying there aren’t businesses and individuals doing it tough. Aggregate GDP numbers are just an overview.

They don’t preclude specific sectors being in recession or others doing very well for that matter.

But for those saying this still feels like a recession, I’m sorry, I think you’ve forgotten how bad the recessions of the past really were.

Here’s hoping we’re not all about to get a sobering reminder.