Bruce Bisset: Making profits from hot air

Surveyed business confidence may have fallen, "but that doesn't marry with a record number of building consents." Photo/File

COMMENT

I love economists. They're the only people who can be consistently wrong, yet continue to spout rubbish as if they're consistently right.

Take the latest bout of economistic foot-in-mouth, over unemployment figures.

On Tuesday morning, every economist quoted believed the jobs market had peaked and unemployment rates for the June quarter would rise, from 4.2 per cent to maybe 4.4 per cent or even more.

There was "mounting evidence" the quarterly results, due out that morning, would show "the trough in unemployment rates is now behind us," huffed big bank economist number one.

This was followed by an observation that rising jobless statistics were what sank governments, and warnings about the raft of economic and social problems increasing unemployment engendered.

A "softening job market" also reflected the "business-led nature of the recent growth slowdown," big bank economist number two chimed in.

Reading between the lines what they were collectively saying is, the coalition government is about to be in trouble – and we can't wait.

Just another log on the fire of the "Labour's no good at economics" mythology.

Come Wednesday and in the wake of news unemployment had actually hit a new 11-year low of just 3.9 per cent, you might expect these gloom-mongers to gracefully apologise for getting it so wrong.

But no. Instead they hurried to renew battle by saying the "surprisingly solid" figures wouldn't stop the Reserve Bank cutting interest rates – something only economists think is a bad thing.

They continued to poo-poo an apparently remarkable turnaround by being "wary of reading too much into it given the volatile and lagging nature of this data" – that from big bank economist number three.

Evidently happy to accept the data as "real" if it agrees with them, dismissive of it as "lagging" if it doesn't.

This also despite public and private wages both rose by an equally-significant 0.7 per cent for the quarter – twice what bank economists had collectively predicted - and 2.1 per cent for the year to June.

Bruce Bisset

As for the supposed "slowdown" they're talking up, where is that happening, exactly?

Sure the RBNZ did cut the official cash rate – to a record low 1 per cent – but listening to its governor, Adrian Orr, it seemed plain this had little to do with either global markets or any domestic slowdown.

On the contrary, Orr said the main reason for the cut was to help government "get the money out the door" to assist its spending on major infrastructural projects and maintain relatively-full employment.

Predictably, this hasn't stopped economists from claiming the cut was a "crisis-like" response to correct a "flagging" economy.

Okay, GDP growth has slowed, but it's still closer to 3 per cent than two, and ironically most economists have been predicting a rise in GDP through the second half of this year – something the Reserve Bank's move will stimulate.

And surveyed business confidence may have fallen, but again, that doesn't marry with (for example) a record number of consents in the pipeline for both domestic and commercial buildings. You don't build if you're lacking in confidence.

I'm not a fan of any of these measures – there are more-inclusive ways to determine the real health of the country than gross production figures – but on a purely economist-oriented playing field you'd surely have to say things are "stable" at worst.

And I'd suggest to the economists that if "confidence" really is the basis on which business decides on investment – and that's always struck me as absurd – then deliberately talking it down does us all a great disservice.

Perhaps we should reflect on who most profits from bad times, and conversely loses money when interest rates fall. Yep; big banks.

Bruce Bisset is a freelance writer and poet. Views expressed are the writer's opinion and not the newspaper's.