Editorial: Spending like there’s no tomorrow

New Zealand seems to be in the thrall of the shopping experience, despite gloomy economic analysis and predictions. Photo / 123rf, File

EDITORIAL

Have you been to the shops yet today? On statistical evidence, it appears to be a very real probability.

This past week it’s been revealed New Zealanders are defying gloomy finance commentators and, perhaps, economic sense by continuing to spend up large in the shops.

Consumer spending in February 2023 through core retail merchants, which excludes hospitality, through Worldline NZ’s payments network reached $2.808 billion - up 7.7 per cent on February 2022 and up 17.1 per cent on the pre-Covid month of February 2019.

The payments solutions firm found spending did dip sharply with Cyclone Gabrielle on Monday, February 13, and the following day for the six regions of Auckland/Northland, Waikato, BOP, Gisborne, Hawke’s Bay, and Taranaki. However, this drop was offset to a large extent – in aggregate and not for all merchants and all regions – by extra spending in the days ahead of the cyclone.

The plunder of the purses wasn’t just for storm preparations or repairs, however.

The Briscoes lady has cause to be grinning more than ever after the homewares chain posted record profits. Briscoe Group, the operator of homeware and sports chains Briscoes and Rebel Sports, reported sales revenue for the last year at $785.9 million was up 5.56 per cent on the previous year.

Overall, household spending is described as flat, as decreased spending on durables, including audiovisual equipment and furnishings, was offset by increased household spending on services. But flat means it’s pretty much same-same, like a recession and cost-of-living crunch isn’t happening.

Meanwhile, the jet engines are running hot with itchy-footed Kiwis taking their seats. Stats NZ data shows that for the latest month - December - the number of Kiwi holidaymakers heading overseas was back to about three-quarters of pre-Covid levels.

During the past year, when borders opened steadily from February, Kiwis spent $4.1 billion overseas, according to Infometrics chief economist Brad Olsenand House of Travel customer engagement director Celeste Ryall reckons the firm is now seeing record numbers of customers looking for winter getaways.

Overall, we are in a current account deficit as we are spending more than we are earning overseas. With earnings from the tourism and education sectors still recovering from Covid, export revenue hasn’t been able to keep up with Kiwis’ appetite for imports.

On the hospitality scene, proprietors report custom is still pretty lean but finding enough staff remains a big impediment. Big overseas chains have faith that Kiwis will keep forking over the dollars to eat out, however. Actor Mark Wahlberg’s burger joint Wahlburgers opened in Auckland last week and massive chain Popeyes Louisiana Kitchen has tipped off its intentions by advertising for upcoming positions in New Zealand.

So where is this money coming from? Global comparison site Finder surveyed more than one thousand New Zealanders late last year and found 56 per cent of Gen Z and Millennials were suffering credit card debt stress. That is, they knew they were in hock for too much. This compared with 45 per cent of Gen X and 34 per cent of Baby Boomers.

The unfortunate trend in recent years to “put it on the house” may also be at play, and a trap lurking in wait.

The Herald on Sunday reveals today that the number of Auckland suburbs with an average property value of less than $1 million has more than doubled in the last 12 months. Twenty-three suburbs that had an average property value of more than $1m a year ago, and are now sitting just above their value in March 2021.

This means some people may be staring down the barrel of negative equity, in owing more on their home loan than what the house is worth.

Perhaps we’re in the midst of a “revenge-spend”, an internationally-recognised trend where people emerge from lockdowns and restrictions with an urge to splurge. Record low unemployment may also boost confidence that there will always be a payday coming up.

One thing is for certain. The bills will be coming and they will need to be paid.