1 00:00:05,600 --> 00:00:08,680 Speaker 1: Gielda. I'm Chelsea Daniels and this is the Front Page, 2 00:00:09,080 --> 00:00:17,680 Speaker 1: a daily podcast presented by the New Zealand Herald. This week, 3 00:00:17,720 --> 00:00:21,279 Speaker 1: the Reserve Bank cut the official cash rate. Now it's 4 00:00:21,320 --> 00:00:24,959 Speaker 1: down to five point two five percent. This is the 5 00:00:25,000 --> 00:00:28,120 Speaker 1: first time it's been cut in four years, since March 6 00:00:28,200 --> 00:00:31,280 Speaker 1: twenty twenty, when the country first went into lockdown to 7 00:00:31,320 --> 00:00:35,680 Speaker 1: combat the COVID pandemic. Politicians have celebrated the news, and 8 00:00:35,800 --> 00:00:41,040 Speaker 1: banks have started cutting interest rates already, but in amongst 9 00:00:41,080 --> 00:00:44,159 Speaker 1: all that joy, there's also a grim warning for the 10 00:00:44,159 --> 00:00:45,680 Speaker 1: state of the country's economy. 11 00:00:46,159 --> 00:00:46,479 Speaker 2: Today. 12 00:00:46,520 --> 00:00:49,040 Speaker 1: On the front Page, we're joined by ensat Herald Business 13 00:00:49,200 --> 00:00:53,920 Speaker 1: Editor at large, Liam Dan to explain what this news means. 14 00:00:53,520 --> 00:00:54,240 Speaker 3: For all of us. 15 00:00:57,760 --> 00:01:02,280 Speaker 1: Liam, the reduction to five point two five percent unexpected 16 00:01:02,360 --> 00:01:05,000 Speaker 1: move or long time in the making? Do you think? 17 00:01:05,200 --> 00:01:09,040 Speaker 3: Well, it was certainly well discussed beforehand. In fact, markets 18 00:01:09,160 --> 00:01:10,920 Speaker 3: had got to the point where they at one point 19 00:01:11,120 --> 00:01:12,880 Speaker 3: had it priced in at one hundred percent. They were 20 00:01:12,920 --> 00:01:16,080 Speaker 3: sure it was going to happen. Then the unemployment number 21 00:01:16,120 --> 00:01:19,520 Speaker 3: wasn't quite so strong. So but even then by Friday 22 00:01:19,560 --> 00:01:22,240 Speaker 3: before the decision, so last Friday we were looking at 23 00:01:22,280 --> 00:01:24,800 Speaker 3: an eighty percent odds on a cut, So a bit 24 00:01:24,840 --> 00:01:27,720 Speaker 3: difficult to call it a surprise on that basis, But 25 00:01:27,959 --> 00:01:30,759 Speaker 3: I was still expecting them to hold, like a lot 26 00:01:30,760 --> 00:01:34,040 Speaker 3: of economists, because it sort of looked like a fifty 27 00:01:34,080 --> 00:01:36,760 Speaker 3: to fifty call. And I'm just a little bit more 28 00:01:36,800 --> 00:01:38,959 Speaker 3: cautious about inflation. But then I don't have all the 29 00:01:39,000 --> 00:01:41,480 Speaker 3: insight and data that the Reserve Bank has. You know, 30 00:01:41,640 --> 00:01:43,640 Speaker 3: we have to wait for inflation numbers. They take a 31 00:01:43,640 --> 00:01:46,920 Speaker 3: long time to come through, quite historic. But the Reserve 32 00:01:46,959 --> 00:01:50,160 Speaker 3: Bank was looking at sort of measures like you know, 33 00:01:50,200 --> 00:01:54,200 Speaker 3: inflation expectations and confidence surveys and all that sort of stuff, 34 00:01:54,520 --> 00:01:57,240 Speaker 3: and it's all added up to a pretty grim outlook 35 00:01:57,280 --> 00:01:59,440 Speaker 3: for the economy and they think bad enough to cut. 36 00:01:59,600 --> 00:02:02,800 Speaker 1: So what's contributed to this cut coming out now after 37 00:02:02,920 --> 00:02:03,640 Speaker 1: four years? 38 00:02:03,960 --> 00:02:06,960 Speaker 3: Well, yeah, the short version is that the economy has 39 00:02:07,240 --> 00:02:10,239 Speaker 3: really just slowed down enough to allow it. So we've 40 00:02:10,280 --> 00:02:13,960 Speaker 3: had long recessionary period. We've been in and out of recession, 41 00:02:14,040 --> 00:02:17,640 Speaker 3: and the Reserve Bank forecast suggests that we're probably in 42 00:02:17,680 --> 00:02:20,519 Speaker 3: what would be the third recession that we've been through 43 00:02:20,560 --> 00:02:22,839 Speaker 3: since the tail end of the COVID period. So even 44 00:02:22,919 --> 00:02:24,760 Speaker 3: just you know, in the last couple of years. We've 45 00:02:24,760 --> 00:02:27,560 Speaker 3: been in and out three times. To a lot of people, 46 00:02:27,560 --> 00:02:30,400 Speaker 3: it probably feels like one long recessionary period. I mean, 47 00:02:30,440 --> 00:02:33,040 Speaker 3: I don't know that the average person's picking up the 48 00:02:33,080 --> 00:02:35,480 Speaker 3: macro thing that much. They just know that the economy 49 00:02:35,520 --> 00:02:38,919 Speaker 3: has been slowing. It feels tough. Interest rates have been 50 00:02:38,960 --> 00:02:41,880 Speaker 3: adding pressure. We've had the inflation as well, so people 51 00:02:41,919 --> 00:02:45,240 Speaker 3: aren't spending. That's the main one. Really, people aren't spending, 52 00:02:45,280 --> 00:02:48,560 Speaker 3: and also the government isn't spending. So the Reserve Bank 53 00:02:48,600 --> 00:02:51,239 Speaker 3: did note that the fiscal impulse, the amount that the 54 00:02:51,280 --> 00:02:55,200 Speaker 3: government spends is coming off, and that's also taking demand 55 00:02:55,560 --> 00:02:58,400 Speaker 3: and out of the economy. With the caveat that, you know, 56 00:02:58,400 --> 00:03:01,240 Speaker 3: there's a little bit going back for tax cuts, but 57 00:03:01,440 --> 00:03:04,480 Speaker 3: it looks like it balances out and overall, you know, 58 00:03:04,560 --> 00:03:06,919 Speaker 3: they're taking demand out of the economy in. 59 00:03:06,880 --> 00:03:10,239 Speaker 1: The immediate What does this cut mean for the average keiw. 60 00:03:10,360 --> 00:03:12,680 Speaker 3: Well, if you're about to fix your mortgage, it probably 61 00:03:12,720 --> 00:03:14,960 Speaker 3: means you'll get a better rate. Banks have moved very 62 00:03:15,000 --> 00:03:18,160 Speaker 3: quickly to you know, adddedly, they probably had their press release, 63 00:03:18,200 --> 00:03:20,160 Speaker 3: two press releases pre written, and there's a lot of 64 00:03:20,200 --> 00:03:23,200 Speaker 3: marketing advantage in being a first mover. But we'd see 65 00:03:23,240 --> 00:03:25,840 Speaker 3: mortgage rates come off a bit already, just in anticipation. 66 00:03:26,360 --> 00:03:30,160 Speaker 3: Because the markets had already priced in lower interest rates, 67 00:03:30,680 --> 00:03:33,480 Speaker 3: they were able to start moving. And then we saw 68 00:03:33,520 --> 00:03:38,120 Speaker 3: a few banks move immediately after the OCR call and 69 00:03:38,280 --> 00:03:41,440 Speaker 3: cut another few basis points off those sort of one 70 00:03:41,520 --> 00:03:45,120 Speaker 3: year and two year fixed rates. So that's good news 71 00:03:45,160 --> 00:03:48,960 Speaker 3: for people. Other than that, I guess it does represent 72 00:03:49,160 --> 00:03:51,839 Speaker 3: sort of the beginning of the end of this sort 73 00:03:51,840 --> 00:03:54,160 Speaker 3: of tough cycle. I hope we're not through all the 74 00:03:54,200 --> 00:03:56,840 Speaker 3: tough stuff yet, but it is okay to sort of go, well, 75 00:03:56,880 --> 00:03:59,080 Speaker 3: you know, this is something symbolic here. This means that 76 00:03:59,120 --> 00:04:02,040 Speaker 3: the Reserve Bank feeling a lot more confident about the 77 00:04:02,080 --> 00:04:05,040 Speaker 3: way their economy is tracking. And so if it is 78 00:04:05,120 --> 00:04:07,640 Speaker 3: really tough, at least you can see maybe some light 79 00:04:07,680 --> 00:04:09,560 Speaker 3: at the end of the tunnel. I mean, we know 80 00:04:09,640 --> 00:04:11,760 Speaker 3: that unemployment is going to keep rising from here, so 81 00:04:12,000 --> 00:04:15,560 Speaker 3: it's a bit hard if everyone's celebrating lower interest rates 82 00:04:15,680 --> 00:04:17,120 Speaker 3: and you get laid off today. 83 00:04:19,200 --> 00:04:22,839 Speaker 4: Well, this is great news for many people in New Zealand. 84 00:04:22,960 --> 00:04:25,679 Speaker 4: Homeowners with a mortgage can now look forward to lower 85 00:04:25,720 --> 00:04:28,919 Speaker 4: interest rates, those with credit card debt or loans, and 86 00:04:29,040 --> 00:04:32,200 Speaker 4: businesses who are thinking about should I expand should I 87 00:04:32,279 --> 00:04:35,760 Speaker 4: hire more people? And the number one thing that businesses 88 00:04:35,800 --> 00:04:37,680 Speaker 4: say to me at the moment is we've got to 89 00:04:37,720 --> 00:04:40,239 Speaker 4: see interest rates coming down. So we're on track. 90 00:04:44,440 --> 00:04:46,640 Speaker 1: So for me as a renter, is there going to 91 00:04:46,640 --> 00:04:47,560 Speaker 1: be much change at all? 92 00:04:47,839 --> 00:04:50,719 Speaker 3: Well, I don't know how much interest rates will flow through, 93 00:04:50,760 --> 00:04:53,800 Speaker 3: but I mean landlords. The equations for landlords should start 94 00:04:53,839 --> 00:04:56,120 Speaker 3: to look a lot better over the next few months 95 00:04:56,160 --> 00:04:59,520 Speaker 3: because they'll be paying lower interest. Now I'm no expert 96 00:04:59,520 --> 00:05:02,040 Speaker 3: in this. They do they ever put rents down? 97 00:05:02,160 --> 00:05:04,640 Speaker 1: You know, it's not in my lifetime. 98 00:05:05,279 --> 00:05:08,400 Speaker 3: No, I'll tell you what happens. This is the complex 99 00:05:08,440 --> 00:05:10,760 Speaker 3: way that they measure it. But there's these measures called 100 00:05:10,760 --> 00:05:14,120 Speaker 3: stock and flow. And so when STATSNZ measures rental prices, 101 00:05:14,120 --> 00:05:17,080 Speaker 3: they measure the rental prices for all of the rental 102 00:05:17,080 --> 00:05:20,000 Speaker 3: that everyone pays, and that's the stock measure, and that 103 00:05:20,200 --> 00:05:23,720 Speaker 3: doesn't move around as much. But they also measure new tenancies. 104 00:05:24,240 --> 00:05:26,360 Speaker 3: And so when we look at the new tenancies, which 105 00:05:26,400 --> 00:05:28,679 Speaker 3: is the flow measure, we see that in the last 106 00:05:28,960 --> 00:05:32,120 Speaker 3: month or two the price for new tenancies for rentals 107 00:05:32,160 --> 00:05:34,880 Speaker 3: as going into new tenancies actually come down. It's a fraction, 108 00:05:35,520 --> 00:05:37,600 Speaker 3: so it's probably not going to come down a lot, 109 00:05:37,600 --> 00:05:40,200 Speaker 3: but it's more likely that we'll see rents track sideways 110 00:05:40,279 --> 00:05:42,280 Speaker 3: and not go up so much. So if your landlord 111 00:05:42,320 --> 00:05:46,240 Speaker 3: suddenly putting rent up, maybe you know, have a bit 112 00:05:46,240 --> 00:05:49,240 Speaker 3: of a debate with them about that. I know there's 113 00:05:49,320 --> 00:05:52,840 Speaker 3: also council rates and energy prices and all that sort 114 00:05:52,880 --> 00:05:53,440 Speaker 3: of stuff, but. 115 00:05:53,440 --> 00:05:55,120 Speaker 1: Hey, I'll be getting you involved. 116 00:05:55,400 --> 00:05:55,640 Speaker 4: Yeah. 117 00:05:56,080 --> 00:05:56,359 Speaker 3: Yeah. 118 00:05:56,480 --> 00:06:00,160 Speaker 1: Prime Minister Christopher Luxen and Finance Minister Nikola Willison they've 119 00:06:00,200 --> 00:06:03,240 Speaker 1: really taken credit for this news, citing the efforts of 120 00:06:03,279 --> 00:06:07,160 Speaker 1: the government to ease spending. Do they deserve that credit? 121 00:06:07,200 --> 00:06:10,720 Speaker 3: Do you think, Umm, well, look some credit. They've they've 122 00:06:10,720 --> 00:06:12,880 Speaker 3: done the right things more or less. I mean, you 123 00:06:12,920 --> 00:06:14,919 Speaker 3: could make the case of, you know, if they hadn't 124 00:06:14,920 --> 00:06:16,760 Speaker 3: done the tax cut, all the tax cuts haven't flowed 125 00:06:16,760 --> 00:06:18,400 Speaker 3: through yet, and we've got there without the tax cut. 126 00:06:18,480 --> 00:06:21,920 Speaker 3: So let's put that to one side and just say, Yep, 127 00:06:21,920 --> 00:06:24,400 Speaker 3: they've done the right thing. They've cut spending, they've helped 128 00:06:24,560 --> 00:06:27,640 Speaker 3: reduce demand. I mean, they've helped the Reserve Bank. I 129 00:06:27,640 --> 00:06:31,280 Speaker 3: think really this is a monetary policy story, and to 130 00:06:31,360 --> 00:06:34,560 Speaker 3: a large extent, what we're seeing, give or take a 131 00:06:34,600 --> 00:06:37,640 Speaker 3: month or two, either side probably would have happened regardless 132 00:06:37,640 --> 00:06:40,479 Speaker 3: of who was in power, I mean not notwithstanding that 133 00:06:40,520 --> 00:06:42,880 Speaker 3: some people think labor government would have kept going and 134 00:06:42,880 --> 00:06:44,880 Speaker 3: spending like crazy. They said they weren't going to. They 135 00:06:44,880 --> 00:06:47,719 Speaker 3: said they were also going to reduce the fiscal impulse. 136 00:06:47,760 --> 00:06:49,919 Speaker 3: So whether or not you believe that, but if we 137 00:06:49,960 --> 00:06:52,760 Speaker 3: take them at their word either way, the Reserve Bank 138 00:06:53,000 --> 00:06:55,560 Speaker 3: was going to be putting up interest rates until they 139 00:06:55,600 --> 00:06:58,520 Speaker 3: achieved this result. And they've achieved the results, I think 140 00:06:58,680 --> 00:07:01,160 Speaker 3: good on the government. They've done the wrong things into 141 00:07:01,200 --> 00:07:04,200 Speaker 3: this storm. I guess they've been on the same page 142 00:07:04,240 --> 00:07:06,719 Speaker 3: as the Reserve Bank and that helps. But it is 143 00:07:06,720 --> 00:07:09,480 Speaker 3: a monetary policy story and it is some sort of 144 00:07:09,560 --> 00:07:10,640 Speaker 3: victory for the Reserve Bank. 145 00:07:20,920 --> 00:07:23,480 Speaker 1: So while there's some good news here, there was also 146 00:07:23,520 --> 00:07:26,400 Speaker 1: a warning in Adrianaw's address, wasn't there. 147 00:07:26,520 --> 00:07:30,040 Speaker 3: Their forecasts show that we're in this third round of recession. 148 00:07:30,200 --> 00:07:32,920 Speaker 3: So they see that the next set of GDP data 149 00:07:32,920 --> 00:07:35,480 Speaker 3: we get will be negative, and that the quarter we're 150 00:07:35,480 --> 00:07:37,600 Speaker 3: in now, which is in GDP data we don't get 151 00:07:37,640 --> 00:07:39,720 Speaker 3: for a long time, will be negative, and they see 152 00:07:39,760 --> 00:07:42,680 Speaker 3: that unemployment will keep rising. So you have to be 153 00:07:43,680 --> 00:07:47,160 Speaker 3: a bit cautious with sounding celebratory about all that, you know, 154 00:07:47,360 --> 00:07:50,640 Speaker 3: it's the beginning of the process of things actually starting 155 00:07:50,680 --> 00:07:52,480 Speaker 3: to get better. But I think Adrian or used the 156 00:07:52,520 --> 00:07:55,760 Speaker 3: phrase its darkest before the dawn. He thinks we're right 157 00:07:55,800 --> 00:07:58,360 Speaker 3: at that point, right before dawn. Right now, here's the 158 00:07:58,440 --> 00:08:01,520 Speaker 3: dawn breaking through. So it's still pretty dark out there, 159 00:08:01,640 --> 00:08:04,000 Speaker 3: but at least we can see that the direction we 160 00:08:04,040 --> 00:08:06,080 Speaker 3: are moving in is the right one. 161 00:08:07,120 --> 00:08:10,560 Speaker 5: And talking to this out look, economic growth remains below trend, 162 00:08:10,640 --> 00:08:16,920 Speaker 5: and inflation is declining across our economies. Yes, services inflation 163 00:08:17,120 --> 00:08:20,360 Speaker 5: remains elevated, but this is also expected to de climb. 164 00:08:23,840 --> 00:08:24,040 Speaker 2: Well. 165 00:08:24,040 --> 00:08:26,640 Speaker 1: With that warning in mind, I understand that there's some 166 00:08:26,720 --> 00:08:30,320 Speaker 1: concern about the bank making these cuts now, given they 167 00:08:30,360 --> 00:08:34,040 Speaker 1: released hawkish statements earlier this year. What did they say 168 00:08:34,080 --> 00:08:36,840 Speaker 1: back in May? That's sparking some backlash now. 169 00:08:36,880 --> 00:08:40,120 Speaker 3: Yeah, a lot of debate and controversy within especially within 170 00:08:40,200 --> 00:08:43,520 Speaker 3: sort of economic circles about this. So in May they 171 00:08:43,559 --> 00:08:46,640 Speaker 3: took a hawkish turn. That means that they were considerably 172 00:08:46,840 --> 00:08:52,319 Speaker 3: more worried about inflation, and they suggested that their forecast 173 00:08:52,360 --> 00:08:54,439 Speaker 3: rate track suggested that we might not see a rate 174 00:08:54,480 --> 00:08:58,640 Speaker 3: cut until August next year, and of course that didn't happen. 175 00:08:58,679 --> 00:09:01,040 Speaker 3: So some economists brad Old some for examples, called it 176 00:09:01,040 --> 00:09:04,080 Speaker 3: a U turn and a flip flop. Others have said, well, look, 177 00:09:04,320 --> 00:09:06,440 Speaker 3: it might have been a misstep, but they've landed in 178 00:09:06,480 --> 00:09:09,000 Speaker 3: the right place now, And Adrian or in the Reserve 179 00:09:09,080 --> 00:09:11,400 Speaker 3: Bank have said, well, those were the facts at the time, 180 00:09:11,440 --> 00:09:13,480 Speaker 3: as far as they can see. When the facts change, 181 00:09:13,520 --> 00:09:16,280 Speaker 3: they change, and that's as far as I can see, 182 00:09:16,400 --> 00:09:19,679 Speaker 3: the right approach. Whether they should be admitting that they 183 00:09:19,679 --> 00:09:22,800 Speaker 3: made a mistake, they certainly aren't admitting that, but some 184 00:09:22,800 --> 00:09:24,440 Speaker 3: people feel that they should admit that they made a 185 00:09:24,440 --> 00:09:27,680 Speaker 3: mistake around those forecasts, and may I don't know. The 186 00:09:27,679 --> 00:09:29,520 Speaker 3: thing to me is that it's all sort of off 187 00:09:29,520 --> 00:09:32,520 Speaker 3: the ball play. It's not the actual results on the board. 188 00:09:32,559 --> 00:09:35,120 Speaker 3: So to me, if you're saying it's a U turn, 189 00:09:35,240 --> 00:09:38,840 Speaker 3: that's what happens when a reserve bank actually puts the 190 00:09:38,920 --> 00:09:40,600 Speaker 3: rate up and then has to put it down again 191 00:09:40,640 --> 00:09:42,560 Speaker 3: because they got it wrong, or they put the rate 192 00:09:42,600 --> 00:09:44,840 Speaker 3: down as they have now, if they had to put 193 00:09:44,840 --> 00:09:48,000 Speaker 3: it back up again because inflation bounced, that would be 194 00:09:48,040 --> 00:09:50,320 Speaker 3: a U turn. This is all happening sort of off 195 00:09:50,400 --> 00:09:54,480 Speaker 3: the ball. Those forecasts did seem really hawkish. I don't 196 00:09:54,480 --> 00:09:59,280 Speaker 3: think anybody really quite took them seriously, and market certainly didn't, 197 00:09:59,320 --> 00:10:02,240 Speaker 3: so mark have sort of stuck to their guns the 198 00:10:02,280 --> 00:10:05,760 Speaker 3: whole way through and have thought that these rate cats 199 00:10:05,760 --> 00:10:08,640 Speaker 3: would be coming around now because usually it's the case market. 200 00:10:08,679 --> 00:10:11,319 Speaker 3: So just you know, the investors are far too enthusiastic 201 00:10:11,400 --> 00:10:14,320 Speaker 3: and optimistic, but they've got it about right. 202 00:10:14,880 --> 00:10:18,240 Speaker 1: The ocr is only one measure of how the economy 203 00:10:18,320 --> 00:10:20,800 Speaker 1: is going. Hey, earlier this week there were also some 204 00:10:20,880 --> 00:10:24,240 Speaker 1: new stats around migration. How many people have left New 205 00:10:24,320 --> 00:10:25,440 Speaker 1: Zealand this time around. 206 00:10:25,559 --> 00:10:27,880 Speaker 3: Yeah, well, I mean, on balance, we should remember that 207 00:10:27,960 --> 00:10:31,480 Speaker 3: we've still got a net migration gain of seventy three thousand, 208 00:10:31,559 --> 00:10:34,160 Speaker 3: so that would have been really high level a few 209 00:10:34,240 --> 00:10:36,880 Speaker 3: years ago, but it is down from record levels like 210 00:10:36,920 --> 00:10:39,160 Speaker 3: one hundred and thirty six thousand that we had in 211 00:10:39,200 --> 00:10:42,840 Speaker 3: the October twenty twenty three year, so that's falling. The 212 00:10:42,960 --> 00:10:45,800 Speaker 3: population gain we're getting is falling. We're still seeing a 213 00:10:45,880 --> 00:10:49,240 Speaker 3: very high number of New Zealand citizens departing, not quite 214 00:10:49,280 --> 00:10:52,440 Speaker 3: at record levels, but we saw fifty five thousand New 215 00:10:52,520 --> 00:10:55,640 Speaker 3: Zealand citizens depart in the June year, so just down 216 00:10:55,679 --> 00:10:58,000 Speaker 3: from in the year to May that was about sixty 217 00:10:58,080 --> 00:11:01,560 Speaker 3: thousand so is certainly the case that a lot of 218 00:11:01,679 --> 00:11:06,000 Speaker 3: Kiwis are leaving the country mostly or about half, probably 219 00:11:06,080 --> 00:11:08,920 Speaker 3: over half are leaving for Australia. But we're still getting 220 00:11:08,960 --> 00:11:11,800 Speaker 3: in a net gain. So generally a net gain and 221 00:11:11,840 --> 00:11:16,360 Speaker 3: migration would add economic activity and potentially add to inflation 222 00:11:16,440 --> 00:11:18,280 Speaker 3: all that sort of stuff. But those numbers are coming off, 223 00:11:18,320 --> 00:11:21,520 Speaker 3: so I think the reserve banks anticipating that they'll keep 224 00:11:21,559 --> 00:11:23,560 Speaker 3: coming off for a while. I hope we see that 225 00:11:23,679 --> 00:11:27,320 Speaker 3: number of Kiwis departing continue to decline as well. But 226 00:11:27,520 --> 00:11:30,240 Speaker 3: overall we're not going to get as many net migrants 227 00:11:30,240 --> 00:11:32,600 Speaker 3: in to boost the economy. So that's another reason that 228 00:11:33,000 --> 00:11:35,040 Speaker 3: they may be are fairly confident that they'll they'll get 229 00:11:35,080 --> 00:11:36,760 Speaker 3: some more slowing in the economy. 230 00:11:37,080 --> 00:11:40,920 Speaker 1: And you mentioned briefly unemployment, but how is it looking, 231 00:11:40,960 --> 00:11:42,400 Speaker 1: particularly when it comes to youth. 232 00:11:42,760 --> 00:11:45,040 Speaker 3: Yeah, I've done some work looking at youth add mule 233 00:11:45,080 --> 00:11:48,400 Speaker 3: re unemployment. I mean, look, the unemployment rate has risen 234 00:11:48,440 --> 00:11:51,400 Speaker 3: to four point six percent, and that doesn't sound that bad. 235 00:11:51,440 --> 00:11:54,720 Speaker 3: It's still historically a lot lower than the average. You know, 236 00:11:54,760 --> 00:11:56,960 Speaker 3: anything below five is considered pretty good. 237 00:11:59,120 --> 00:12:02,080 Speaker 2: Now that four point six percent is actually slightly lower 238 00:12:02,080 --> 00:12:04,640 Speaker 2: than forecast than many expected, but it is going to 239 00:12:04,720 --> 00:12:06,760 Speaker 2: keep going up. It's going to go above five percent 240 00:12:06,760 --> 00:12:09,160 Speaker 2: in the next few months, and that is thousands more 241 00:12:09,200 --> 00:12:12,480 Speaker 2: people out of work and a number more business is closing. 242 00:12:12,520 --> 00:12:14,959 Speaker 2: We're already seeing those liquidations piling up. 243 00:12:17,600 --> 00:12:19,480 Speaker 3: The thing is when we look at the number of 244 00:12:19,520 --> 00:12:24,680 Speaker 3: those freshly unemployed people, that's thirty three thousand more jobless 245 00:12:24,720 --> 00:12:28,360 Speaker 3: people in the past year. In the fifteen to nineteen 246 00:12:28,679 --> 00:12:32,000 Speaker 3: age group, the unemployment rate is now twenty percent, up 247 00:12:32,040 --> 00:12:34,520 Speaker 3: from fifteen percent. That's pretty high, and if you look 248 00:12:34,559 --> 00:12:37,720 Speaker 3: at MARI unemployment it's even worse. It's about thirty percent 249 00:12:37,760 --> 00:12:39,640 Speaker 3: for the fifteen to nineteen year old age group. These 250 00:12:39,640 --> 00:12:41,880 Speaker 3: are people who are not in other training as well. 251 00:12:41,880 --> 00:12:44,160 Speaker 3: They have to tick the box to be qualified as unemployed. 252 00:12:44,160 --> 00:12:48,480 Speaker 3: But overall, you can see that unemployment really hits certain groups, 253 00:12:48,800 --> 00:12:52,719 Speaker 3: like we know MARI are overrepresented, and it hits young 254 00:12:52,760 --> 00:12:54,840 Speaker 3: people hard. So I guess my concern is that we 255 00:12:54,880 --> 00:12:56,360 Speaker 3: want to get through this quickly and we want to 256 00:12:56,400 --> 00:12:58,880 Speaker 3: stop at peaking at a high level, because if it 257 00:12:58,960 --> 00:13:01,400 Speaker 3: stays high for a long period of time, you sort 258 00:13:01,400 --> 00:13:04,000 Speaker 3: of create a culture of unemployment, which I think we 259 00:13:04,000 --> 00:13:05,800 Speaker 3: still suffer from in this country, and I think we 260 00:13:05,840 --> 00:13:08,679 Speaker 3: suffer from it from the various points in time when 261 00:13:08,679 --> 00:13:12,280 Speaker 3: we've pushed unemployment really high to beat inflation, going right 262 00:13:12,320 --> 00:13:14,680 Speaker 3: back to say, the early eighties, and then again in 263 00:13:14,679 --> 00:13:17,679 Speaker 3: the early nineties, and then with the GFC, we've seen 264 00:13:17,760 --> 00:13:21,880 Speaker 3: high unemployment rates and much higher unemployment rates for Maori 265 00:13:21,920 --> 00:13:22,960 Speaker 3: and for youth unemployment. 266 00:13:23,200 --> 00:13:26,920 Speaker 1: And what about electronic transaction data that's out as well. Hey, 267 00:13:26,920 --> 00:13:28,360 Speaker 1: what are the headline points there? 268 00:13:28,520 --> 00:13:33,040 Speaker 3: Yeah, we got some fresh data today on electronic card transactions, 269 00:13:33,040 --> 00:13:35,319 Speaker 3: which is just spending. It like, how much is getting 270 00:13:35,320 --> 00:13:38,480 Speaker 3: spent with cash these days? Not much, so really that's down, 271 00:13:38,720 --> 00:13:41,480 Speaker 3: So retail spending is down. That will reassure the Reserve 272 00:13:41,559 --> 00:13:44,199 Speaker 3: Bank after making this move. We also saw some food 273 00:13:44,200 --> 00:13:47,240 Speaker 3: price data and some sort of general pricing data around 274 00:13:47,320 --> 00:13:51,040 Speaker 3: petrol and rents, and that was up slightly for the year, 275 00:13:51,160 --> 00:13:53,400 Speaker 3: not much, but it was largely driven by a bit 276 00:13:53,440 --> 00:13:55,200 Speaker 3: of a spike in the cost of eating out, which 277 00:13:55,200 --> 00:13:58,760 Speaker 3: suggests that the hospitality people are passing those costs through. 278 00:13:59,040 --> 00:14:04,160 Speaker 3: But reassuringly, you know, fruit, veggies, meat still coming down. 279 00:14:04,320 --> 00:14:07,280 Speaker 3: Those prices are still falling, so that's positive sort of 280 00:14:07,320 --> 00:14:08,920 Speaker 3: coming back to earth cause I guess you know, when 281 00:14:08,920 --> 00:14:11,160 Speaker 3: it comes down to it, it is very tough in 282 00:14:11,200 --> 00:14:13,960 Speaker 3: that hospitality sector because people have got a choice, They 283 00:14:13,960 --> 00:14:16,160 Speaker 3: don't have a choice about eating, and so the basic 284 00:14:16,240 --> 00:14:19,680 Speaker 3: items are coming back down. Inevitably, the ability of those 285 00:14:19,960 --> 00:14:23,360 Speaker 3: fast food places restaurants to pass on costs will hit 286 00:14:23,400 --> 00:14:25,200 Speaker 3: a wall, and I expect we'll see that fall too. 287 00:14:25,560 --> 00:14:28,320 Speaker 1: So with all that in mind, are things looking good? 288 00:14:28,520 --> 00:14:31,640 Speaker 1: You wrote in a piece about the OCA that people 289 00:14:31,680 --> 00:14:35,440 Speaker 1: were celebrating like it was ve Day. Are those celebrations 290 00:14:35,480 --> 00:14:38,000 Speaker 1: deserved or should we actually be heating or was warning? 291 00:14:38,280 --> 00:14:40,360 Speaker 3: Yeah? I think the warning and the reality of the 292 00:14:40,400 --> 00:14:42,640 Speaker 3: economy will sink back in. I mean, you know, we 293 00:14:42,680 --> 00:14:44,440 Speaker 3: had the press conference from the Prime Minister and the 294 00:14:44,440 --> 00:14:47,480 Speaker 3: Finance minister. We had the retail banks moving the mortgage 295 00:14:47,560 --> 00:14:49,640 Speaker 3: rates and a lot of commentary that was very excited 296 00:14:49,640 --> 00:14:52,120 Speaker 3: about that cut. And that's okay, I think, I mean, 297 00:14:52,160 --> 00:14:54,520 Speaker 3: I think we should celebrate the fact that we've kind 298 00:14:54,600 --> 00:14:56,800 Speaker 3: of got through this cycle. I mean, it's been a horrible, 299 00:14:56,800 --> 00:14:59,800 Speaker 3: horrible time and it's taken a long time, and it's 300 00:14:59,840 --> 00:15:01,840 Speaker 3: all all to do with it all goes right back 301 00:15:01,840 --> 00:15:05,040 Speaker 3: to COVID, the pandemic. You know, what was done to 302 00:15:05,080 --> 00:15:08,600 Speaker 3: try and stop the economy collapsing. Then we look with 303 00:15:08,680 --> 00:15:11,400 Speaker 3: hindsight and say, look, maybe too much was done whatever, 304 00:15:11,440 --> 00:15:15,480 Speaker 3: but its spiked inflation around the world. New Zealand doesn't 305 00:15:15,520 --> 00:15:20,360 Speaker 3: have that much capacity for stimulus in its economy unfortunately, 306 00:15:20,400 --> 00:15:23,280 Speaker 3: so we copped a bad lot of inflation. And the 307 00:15:23,280 --> 00:15:25,520 Speaker 3: fact that it's all coming back to earth it's a 308 00:15:25,560 --> 00:15:28,520 Speaker 3: victory for monetary policy generally, whether you think the Reserve 309 00:15:28,560 --> 00:15:31,360 Speaker 3: Bank's got it exactly right or not, these tools we use, 310 00:15:31,480 --> 00:15:34,800 Speaker 3: blunt as they are, have pulled inflation back into line. 311 00:15:35,160 --> 00:15:37,640 Speaker 3: It's worked. I feel very happy about that. I know 312 00:15:37,680 --> 00:15:39,320 Speaker 3: we've got a long way to go, and I think 313 00:15:39,360 --> 00:15:43,040 Speaker 3: the reality of the economy will sink back in, but 314 00:15:43,320 --> 00:15:44,960 Speaker 3: you know, there's still battles to be fought, and there 315 00:15:45,000 --> 00:15:47,800 Speaker 3: always will be in economics. But really, unless there's a 316 00:15:48,040 --> 00:15:51,480 Speaker 3: major reversal of the trend or oil prices spiked badly 317 00:15:51,600 --> 00:15:54,320 Speaker 3: or something like that, it looks like it is kind 318 00:15:54,320 --> 00:15:56,280 Speaker 3: of the wind that we were looking for in the 319 00:15:56,280 --> 00:15:57,000 Speaker 3: war on inflation. 320 00:15:57,560 --> 00:16:05,200 Speaker 1: Thanks for joining us, Liam. That's it for this episode 321 00:16:05,240 --> 00:16:08,160 Speaker 1: of the Front Page. You can read more about today's 322 00:16:08,200 --> 00:16:12,640 Speaker 1: stories and extensive news coverage at enziherld dot co dot NZ. 323 00:16:13,480 --> 00:16:16,760 Speaker 1: The Front Page is produced by Ethan Sills and sound 324 00:16:16,800 --> 00:16:21,520 Speaker 1: engineer Patti Fox. I'm Chelsea Daniels. Subscribe to the Front 325 00:16:21,560 --> 00:16:25,280 Speaker 1: Page on iHeartRadio or wherever you get your podcasts, and 326 00:16:25,360 --> 00:16:28,720 Speaker 1: tune in on Monday for another look behind the headlines.