RBNZ/Treasury still pulling $ out of the economy (net) as cvid era QE gets undone. See how bond sales (red) are way higher than needed to soak up Govt deficit spending (pink)? This is discussed quite a bit in countries with a functional economics commentariat. Worth a look at Govt deficits... [1/2]

Sunday afternoon doing the accounts. Here's the average annual deficit spend in NZ over the last ten years by sector. Add the numbers up. What is the total? Zero. Yes. It has to be. The balance of sectors has to sum to zero. The economy runs on double-entry book keeping. [🧵 1/n]

Finally had time to dive into last week's budget data and update previous work on deficit spending forecasts vs actuals. Let's start with year ending June 2024. Grant's last budget in May 2023 forecast a whopping $30bn of deficit spending (op+cap) - but this fell to $22.2bn by Dec 24. Why? [🧵 1/n]

Little bit of context for those GDP figures. Self-flaggelation champions are down the bottom. Have you seen any of these international comparisons in the media? I might have missed them.

NZ food prices turning 9 - 12 months after world prices, as per the well-established trend. Why? Because we pay import price plus costs (and export prices because).

Post-war period fascinates me - we built *loads* of infra and houses but public debt levels fell. There must be things we can take from that era to inform what we do next. Also fascinates me that the 1980 to 2008 period is considered a success - we maxed out our private debt, and what did we build?

So, comparing year to Sept 25 with the preceding 12 months (to Sept 24). What industries are powering our recovery (as measured by silly GDP)? NB graph only shows industries with positive change. Well, we're buying more houses again - so estate agents are back in the money. Great work guys. [🧵 1/n]

OK, enough wobbly GDP figures, let's look at some real data. As expected, NZ jobs are still on track for annual growth in the new year. *Then* we will be bottoming out. *Then* after many miserable years - the economy will get hot enough for near-full employment *Then* RBNZ will crash it again [1/2]

We are so back. In other words, we have stopped falling. It is truly remarkable that NZ almost uniquely plunged its economy into a sustained recession in response to a global inflation shock that other countries just rode out. And, now we are celebrating ending our self-flaggelation. [1/2]

Quick explainer. If Govt create and spend $190bn into existence (as they do) and they then collect revenue of $170bn, and destroy it, that leaves $20bn of what Treasury call 'residual cash' in the econony. (🧵 1/n)

That cut back in Govt investment in 2025 clear to see - it's a major reason the economy slumped. But, don't worry, Treasury are confident that we'll be building loads of roads by 2027 and house prices will be going up over 5% a year. Praise be. [NB residual cash without FLP]

The jobseekers forecast is not as far out as the main benefits, and great to see the forecasts going all the way out to Govt's jobseekers target (please Louise, take it away). MSD are worknig feverishly to keep the lid on jobseekers numbers.

Imagine finishing your benefit forecasts for HYEFU, closing your laptop, and heading to floor 8 for a few miserable xmas treats... then the actual data comes out and blows your calculations out of the water! [NB: Actual data varies slightly from forecast data, but not by much)

Phew. The seasonal pick-up in jobs in early November is finally here (image 1). We might even get a December peak above last year. We still look a couple of months off actual annual job growth though (image 2). The '34 days' series is the more complete data used for the official stats.

Geeky post, but amazes me how much stock gets placed in GDP. A great example: wild ride in GDP during Cvid (yellow line). It was almost entirely a measurement issue. GDP excludes Govt spending considered a subsidy. If you recognise the subsidy as spending you get a trend that reflects reality.

Imagine Richard living in the human world. There he is, seriously telling a village chief that he will need to sell off the exclusive rights to the village well before the villagers will be able to build a flour mill. The chief is like 'my guys are sat waiting to build the mill, ghoul. Do one!'

Wellington and Auckland economy still down the toilet - so real rents are heading south. Wellington rents probably at record lows in wage-adjusted terms - an economic downturn + Govt nibbling on the public sector will do that. Few other reckons... [🧵 1/n]

Our 'twin peak recession' clearly visible in the companies data. The annual change is still very positive - and appears to have paused. This perhaps reflects a more aggressive IRD? Note that the rolling annual data (blue) is not adjusted for the number of companies, size of economy etc.

One of the obvious impacts of Govt not investing into a downturn is tanking taxes (= higher deficits). Countless examples across the world, but sadly most of our reckonomics commentariat are small island caveman monetarists, so, prices going up? Ug. Throw kiwis on the dole, ug, crash economy. [🧵1/n]

It's B7 day! The day when we can work out how much interest is being added to our huuuuge stack of outstanding mortgages ($384 billion and counting). The actual avg rate dropped to 5.27% in October, meaning interest charged was about $1.7bn for the month. Yes, it's still high. Be (very) patient!

Weekly jobs data update. The grind back to standstill continues. It still looks like it will be February 2026 before we see annual job growth increase to, errrm, zero. NB The 34 days series is more complete / stable than the 20 days series. [🧵1/n]

I call the first graph 'the cheapening'. Imports got cheaper in real terms for decades and we celebrated our new found wealth - thanking the neoliberal lord for good old Roger D. The cheapening stalled in 2015 and in 2021 imported services (30% of imports) took off. Game is changing. We're not.

Latest Govt financial stats out last week. Interesting what we have invested more in over the years (hi kids). Always worth remembering that if you let inequality run riot, Govt has to tax more and more to redistribute income to people on low incomes that can't afford to eat, rent or pay the bills

So, police, prison guards, judges etc: Of course Govt will pay to train and pay enough kiwis to enforce the law, lock bad people up, and please the ghouls. But... GPs, health specialists, dentists etc: We will offer interest free loans and other flacid crap to make sure people get what they need.

I have had and heard this debate many times. It ends with economists admitting Govts do create taxpayer dollars (sic) by spending, as do banks by lending, but they don't want politicians to get any fancy ideas about using that framing and power for the public good.

The last sentence might sound like semantics, but it's important. Govt spending adds cash to the economy (we get richer) and Govt taxation takes it away again (we get poorer). Govt 'borrow' by creating cash and spending it. The more $ Govt spend, the more $ we have to pay taxes. A simple truth.

Things that Labour will say 'yes' to: 1. We need 120,000 people unemployed (at least) to stop wages going up by too much. 2. Banks can extract $8bn a year in profits, because that's the price we should pay. 3. The market will eventually deliver affordable energy / food / rent - be patient comrades.

I tell you what's irresponsible, leaving hundreds of thousands of kiwis wanting work or more work... There is loads of stuff that needs doing.

Oft-ignored dataset - IRD's count of people by primary income source. Here's the annual change data - the hope is that the red bars (benefits) get back to zero growth - maybe next winter? The blue bars (work) could turn positive in early 2026 when we get a tinsy bit of job growth. [1/2]

Total NZ bank deposits are up $26bn compared to a year ago and term deposits are unsurprisingly on a super go-slow as interest rates plummet. Now, errrm, which amazing wealth creators have made that extra $26bn for our spending pleasure? Step forward our two heroes... [🧵 1/n]

Credit flows are positive again folks - the banks are creating more money out of thin air than they are destroying when we make repayments. Don't worry though, this is how things work - it's how we get more money in the bank in our marvellous modern economy. A few other reckons... [🧵 1/n]

Spending is heading up. An inevitable consequence of giving mortgagors more disposable income. What will this mean for things that matter? (🧵 1/n)

Another Monetary Policy Statement, another 'whoopsie we over-cooked the whole job crushing thingy'. Forecast GDP still falling away (bye). What else? [1/n]

An uptick of hope in the job ads - that little blue prick below the smiley face is a cause for celebration. But, jeez it's a long slog. Few random reckons on the power of RBNZ... (🧵 1/n)

You might have seen National propaganda on how much kiwis are saving on mortgage payments. So, quick reality check, and a little explainer... The actual average interest rate on *all* NZ mortgages moves slowly - in large part because most of us plucky mortgagors are on fixed rate deals [🧵1/n]

Wassup with asset sales? Why is a wealth tax a bit meh? Quick 🧵 Glib analogy, but life in the neoliberal economy is like monopoly. You work, earn cash, and pay for things you need as you go round the board. If you earn more than you spend, you can buy an asset - some shares, a house etc... [1/n]

Ah jobs, come on! We have had 18 months of negative annual job growth now. The population has grown by around 60,000 people (despite kiwis fleeing for countries that didn't opt for a deep recession). Remember we need the lines below it break above the white line (standstill). (1/2)

Reminder of why rents are reducing. I mean it's good that they are, but it's just because people can't afford to pay more and our population growth is slowing right down. Rents rise in lockstep with wages.

Same tired old ghoul formula... 1. Define a problem. 2. Add some numbers and smart sounding stuff. 3. Draw the long bow on some reckons. 4. Conclude with the same old 'solutions'... deregulation, reducing universal services, sell assets to offshore investors.

Few offcuts from hungover poking at latest benefit data. First up, areas with above average increases in people claiming a working-age benefit from Oct 2023 to Oct 2025 (adjusted for population). Surprised by who is the the top? [🧵 1/n]

It would be ironic if my glass half empty takes on the NZ economy proved to be overly optimistic. But, the latest benefits data is really bad. I expected that yellow line to continue to trend down, but, errrm, it isn't.

The Govt's rationing speclialist (aka MSD) is overheating trying to constrain benefit spending, but the number of people on a working-age benefit continues to sail way above forecasts. We are watching a permanently scarring event here. Grim.

Weekly jobs update... how's the hopium? I am guessing you could see we're back on track... if the track we're back on is one of those slow grinding uphill kinda tracks. When will the crappening stop? [🧵1/n]

Bbbbut, I thought everyone was saving a gazillion dollars on their mortgages now? Why aren't the poor people spending all their money? Are they saving up for a ticket outta here?

One of my favourite graphs - how we pay higher house prices and help old folks cash out of the ponzi.

Hmm, so inflation is 3% and Govt is paying a touch under 2.9% interest on its debt. Govt is also getting a fat return on its financial assets... which outweigh its debts by around $70bn. Meanwhile, we can't afford to invest in the country and Treasury are sounding alarm bells!

I'm old enough to remember Treasury officials setting Govt finance within a macro context. Now we get silly 'geeing up the ghouls' scare stories. For a start, all the OECD countries on the left side of this chart have run Govt deficits on average since 2010. It's normal. [🧵1/n]

The Canadien Government has made an ad about the proposed Ksi Lisims LNG terminal & PRGT Pipeline, and it's surprsingly honest and informative.

Paywall lifted: At every turn, the Govt has opted for whatever would actually lead to more pollution and a warmer world – even if it costs more, jeopardises NZ’s reputation, overturns a campaign promise or clashes with the Govt’s other priorities. The long retreat: newsroom.co.nz/2025/11/07/g...

Regular reminder that RBNZ publish real data on mortgage costs. National and the bank reckonomists love to talk about the costs of *new* mortgages only, but what drives the cost of living is what kiwis *actually* pay on our $384bn mortgage pile. Here's the real data... [🧵1/n]