Oh, Luke, can you not see the forest for the trees? This article is like a tiki tour of the neoliberal myths and legends that still shape our discourse (and hold us back as a country). Let's have a look... [🧵 1/n]

Latest tax data is depressing. The economy has stalled and we've got a recessionary wave coming towards us from overseas. Govt and their ghouls think the solution to global volatility and the widening gap between income & expenditure is to reduce spending! Why are they fking idiots? Read on. [🧵 1/n]

Latest Crown accounts tell a depressing story in cold numbers. Our permaslump economy and tax cuts have stalled tax revenue. But higher benefit numbers and the inevitable march up in health and super costs are pushing spending up. (1/3)

Balance sheet update (yesterday's data). Let's start with that little pink stub - total Govt liabilities (debt). Believe it or not, *that's* the debt number that our commentariat obsess over! Let's dive in and have an explore... [🧵 1/n]

I often get asked the question (cos people know I'm sad): How can the NZ Govt balance sheet be so healthy despite all of the crazed covid borrowing etc? Let's have a quick look. [🧵 1/n]

My favorite dataset day! Fascinating change in the sector balances data. Lower interest rates are basically enabling our business sector to reduce debt. They're not investing in expansion, they're repairing balance sheets. This is why GDP is up (profits) but the labour market remains stalled.

You might have seen the Armageddon messaging on Govt debt servicing costs. Funny that they focus on the gross rather than the net isn't it? Higher interest rates boost cost and income.

Total household bank deposits per capita adjusted for inflation. Another great example of the spluttering non-starter of a recovery. Mid-2025 was worthy of a tiny bit of hopium but we're a whisker away from dipping into the negative now. When does that happen - 2000, 2009, 2020, 2023. Spot a trend?

Fresh debt data day... May as well have a look at how far off recovery we are/were... First up, our economy relies on credit to get going. When we get 'going', we borrow to invest in things. This two-way dynamic is clear in the data. Credit and job growth are best buddies (nb c19 anomalies). [🧵 1/n]

So, the 3.7% hopium forecast for inflation is toast? Fancy that! For the avoidance of doubt, if petrol prices hold at *current levels* (Apr-June) that will mathematically add 1 percentage point to CPI for that quarter. Indirect effects will add at *least* another percentage point. This isn't hard!

Such an important thread.

NZ National Party took this post down. Maybe they remembered that their first budget in May 2024 preceded a record-breaking increase in Govt net debt? Or, maybe they realised that it looked like they were going to spend 17% of their budget on 'fuel cost support'!

Oh, Liam, damn, I stumbled into reading this, and now I have to spend 20 minutes commenting. First up there was no 'recovery' - things had stopped getting worse, but the only positive measures were vibes-based. Bbbbut, how could things not get better with the grown-ups in charge (etc)? [🧵 1/n]

NZ consumes 12.3m litres of diesel / day. Price is up $0.40 per litre. That's a cost increase of $4.9m per day - mostly paid by businesses. The Crown *opted* to pay more than this to the banks *for two years* between 2022 and 2024 to keep interest rates high enough to 'tame inflation'. [1/2]

Some good charts in Paul Conway's speech this week. I wanted to pick on the classic dog-leg NZ labour productivity chart (to which I have added private debt). Why do I think private debt is key to understanding the 2009 stall in productivity growth? Let's dive in... [🧵 1/n]

Turns out that Govts having a strategy and using policies and investment to deliver said strategy is a positive thing after all! Whuddathunkit.

Remarkable watching Govt inch slowly towards understanding magnitude of the fuel situation, so obviously blinded by optimism bias & ideological aversion to intervention... constantly a week or so behind those that have, errm, read the briefings. Some sense of what 2020 would have looked like I guess

Weekly jobs day. Tracking 2025 still despite a decent increase in the working age population.. Tiny speck of a year-on-year increase in February is possible - freak week maybe? Anything happen in March to undermine that??

If higher fuel costs are pushed through to other prices and (God forbid) wages, the answer will be to increase business and household debt servicing costs. If higher debt servicing costs are pushed through to other prices then... errrm, hold on, I have questions.

Average mortgage for an actual property purchase took a dip in February... but still trending around 5% higher year-on-year. Number of new mortgages also recovered to 2019 levels. Housing debt is back on the rise again - but house prices aren't - really unusual! But, hey, crazy times.

New hobby - guessing which of the gas stations in the 'top five cheapest' on Gaspy have just forgotten to change their prices.

A lot of talk about the impact of rapid changes in fuel prices, but worth a look at the long-term trend. See how lower fuel prices in real terms from the mid-80s coincided with more consumption and what economists think was a 'booming productivity era'? Yeah, that was cheaper energy, ay? [🧵 1/n]

Time poor so crude calcs... Avg household spends 4% of income on fuel ≈$61 per week. 2 million households x $61 ≈$122m / week. 30% increase in fuel costs ≈$37m / week. Govt subsidy ≈$6.6m per week. So, subsidy will take ≈18% of the sting off. *If* you are working with kids, obviously.

Pleased to announce that, for one year only, kiwis will be able to suspend their kiwisaver contributions so that they can afford to pay more for fuel. It's the least we can do - working kiwis need our support.

Looking forward to hearing tomorrow how swing-voting New Zealanders will be supported through the fuel crisis.

More @doctorow.pluralistic.net

Chris had steered the domestic economy so skillfully over the last few years that inflation & interest rates had come down across the *whole wide world*. Chris was excited to see what he could achieve if he focused real hard on the fuel crisis. Keep the other Chris off the wheel? World peace?

Watching Luxon claiming credit for interest rates being lower than a few years ago - yeah, like everywhere else you egg. If he wants to claim credit for something stand out about our economy over the last few years, he could talk about our go-it-alone recession. Envy of the world.

What's pulled CPI up over last 25 years? Basically the cost of services and property. Now look at what's pulled CPI down (image 2). Thanks world! Now, what happens if world stops selling us ever cheaper stuff *and* prices rise to reflect infra catch-up cost (rates) and climate risk (insurance)?

In May 2019, Grant published his budget for the year ending June 2020. The plan was for the Core Crown to spend $4.2bn more than it collected (aka residual cash - see green arrow). The year didn't go to plan. When the dust settled on the 2019/20 accounts the figure was $23.7bn. ALT for notes. [5/n]

Imagine if you had made your whole 'sound economic managers' schtick about stopping that yellow line going up? Of course, the blue line is more interesting, but, enough about the private sector being in net debt to the NZ Govt.

OK, I might have spent the afternoon consolidating Budget data so that I can have rapid reckons on the forthcoming Budget. A 🧵 on borrowing forecasts vs actuals, which I've wanted to explore for a while (I know...🤓) First, let's get our definitions sorted out... [1/n]

That's right folks, the economy is sliding sideways because people are 'reluctant to spend'. This is such an infuriating narrative - Liam needs to replace 'reluctant' with 'unable'... how many households have gone from two earners to one? How many have seen costs rise by more than earnings?

It's worth reading why Fitch credit rating agency downgraded NZ to 'negative outlook'. The Govt's response babbles on about the need to reduce spending - a narrow ideological response to the strategic challenges Fitch recognise. A quick look... [🧵 1/n] www.fitchratings.com/research/sov...

Govt *share* of consumption tells you about the proportion of a country's real resources (workers, materials, imports, energy etc) that are appropriated by the Government and used to deliver public services like free healthcare, dental, education etc. Quick comparison to last week's happiness data.

Sorry, guys, but this whole middle east thing means Treasury are going to have to downgrade their forecasts... you know, like they have every six months for the last few years while we've been getting back on track and nixing the basics.

When someone says that we had high oil prices four years ago and we were fine, show them this picture. The rate of change matters - that's what determines whether it is a price shock.

Fact check: Untrue. The Govt takes on debt by spending money. As soon as Govt spends money, it creates a liability (the $ spent). That debt is cancelled when people pay taxes. Bond sales swap the form of Govt debt from $ to Bonds.

wow

Do you have a version of this for Treasury? Asking for some friends...

MSD have finally released benefits data - but no detailed December and January data yet. The partial data released for Dec and Jan looks a little suspect still. We can have confidence in the February data, which has people on working-age benefits at 3% higher than last year [long benefits🧵 1/n]

An opportune moment to remind ourselves that countries with central banks that went full macho on rate hikes to 'tame inflation' (caused by a supply shock) did no better than those that didn't. But, boooy, it felt good to make poor people unemployed.

Yesterday's news, but a canter through flows of money onshore and offshore. Remember the more that flows offshore, the less demand (and jobs) we have at home *and* the more NZ assets we have to sell to offshore investors. First up, we have had a rough time on goods balances (for years). [🧵 1/n]

Few GDP day reckons - I know it's not a measure of progress, but the underlying data tells you a lot about what's going on. Key message: It is crystal clear that the $ released by lower debt-servicing costs is flowing straight to company profits & debt reduction = 'a jobless recovery'. [🧵 1/n]

What did I miss? Ah, just another miss. We've had a couple of years of over-optimistic RBNZ forecasts now - same with Treasury. Their optimism is dangerous - it makes the Govt complacent.

I hear there's a report out about the $24bn contribution that landlords make to GDP. Always worth remembering that GDP(P) is the surplus generated by each sector, which is basically equal to wages + operating profits. So, not-for-profit housing doesn't contribute as much to GDP directly.

right guys, economic cycle is not going to save us, let's get our brain cells tuned into this thing big-style, Burgess - get on the whiteboard... now... what you got Erica? www.rnz.co.nz/news/nationa...

Monthly CPI data is out - covers nearly half the total basket. During January and February, lower fuel prices took some of the heat out of the cost of living. March will be a different story. April could be a whole new spectacular.

So Treasury reckoning on CPI hitting 3.7% if the 'war' carries on all year? Let's have a little poke at those assumptions. First up, we are seeing a fuel price shock with unprecedented early pace. These are 'right now' figures, subject to adjustment, but, good grief, this kicks like a mule [🧵 1/n]

Annual change in card spending - not adjusted for inflation or population. The actual numbers continue to challenge the reckons.