GDP day: Has ‘rock star’ hit a bum note?
Figure will show if Govt negativity has soured nation’s mood
Good Morning and welcome to GDP day. In many respects a report card of the Government. Has what they’ve been up to led anywhere good?
Because despite what they might tell you, and despite there being many strings to a government’s bow, the simple reality is that no matter what a government wants to do they can only do it with money, and money comes from growth.
It has been a fascinating story since their arrival late last year when it comes to these sort of numbers.
The very early days, when growth held up well, that of course was the result of the previous Government, as indeed was the very large amount of money Grant Robertson had to play with in the Budget.
The early signs of trouble reared their heads in those consumer and business confidence surveys. The numbers were falling, in some cases badly.
The Government, to their credit, realised this and tried, perhaps in vain (we’ll find out today) to reassure business that they heard them, listened to them and wanted to be on side with them.
They also offered up the suggestion that history shows
business doesn’t like Labour governments and what they say to a pollster and what they do at their premises have often been two different things.
The counter to that is that worry and concern leads to action.
Lack of confidence does in fact lead to a lack of sentiment and action around things like purchasing and hiring, and that reality is starting to be seen.
Not everywhere, latest manufacturing and services sector numbers remain resilient for now and they are major contributors to the economy.
But what we also have is a consensus among economists that growth is slowing, they put it now into the “2s” and if the annualised number this morning has it that low, then the Government has trouble.
Because in the simplest of terms, 2 isn’t good enough . . . not even 2.9.
The OECD is forecasting in excess of 3 for its collection of economies. America, they think, is trending towards 4. Our biggest trading partner China rumbles on with its usual 6 to 7.
In other words, for the past decade it’s been the other way around — out of the GFC we defied gravity, grew at rates higher than our trading partners, hence we were the rock star economy.
The power of this morning’s number is it puts what the surveys say into the real world. The mood has become fact. Of course, if the economists and forecasters are wrong, then forget it, we’re rolling.
But there would appear to be too much evidence now that the worry of workplace reform, the pending industrial action, the likes of which we haven’t seen for years; the extraordinary pay demands that are being turned down; the attacks on the economic activity of the regions from the farmers and cow capping; to Taranaki and oil exploration; to the West Coast and mining; the tax on motorists through petrol, is leading to the cost of everything rising.
You can’t do all that, without raining on a lot of parades and people feeling they’re being beaten up on, and life is getting a bit hard.
Economic activity is at least in part, and often a very big part, about confidence and feeling good and risk taking and throwing a bit of caution to the wind.
You don’t do that with an overarching government ploughing across your landscape upending stuff.
And of course, as any psychologist will tell you, if it starts, it’s hard to stop.
If growth is down and slowing, it will be contagious. If you give too many people a reason not to do something they won’t.
That’s why a critical part of a government’s role is to lead.
To be a cheerleader, to be a proud and productive and supportive of what we do as a country.
This Government to this point has spent its opening nine months telling us the place is stuffed and it needs upending.
And if the forecasters are right, the effects of this will be seen in a number this morning, that if it’s too low should be a massive wake-up call that, as transformational as they want to be, you can’t do that when everything that drives it is failing to fire.