Brad Olsen: Infometrics Chief Economist on the GDP increase and what it means for quarter 2

New Zealand's officially out of a technical recession but may not be out of the woods. 

Stats NZ figures show GDP rose 0.2% in the three months to March and the same amount for the year. 

However, per capita GDP decreased by 0.3%. 

Infometrics Chief Economist Brad Olsen told Mike Hosking that the numbers are not looking promising for Q2. 

He said that some of the important pieces of the business economy haven’t been doing as well —construction, non-food manufacturing, professional services— which doesn’t bode well for general economic momentum. 

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Episode Transcript

Speaker 1 (00:00):
Headline was zero point two percent to the good and
we're officially out of recession, but it an't over, of course,
and that's the real story. With the current court, are
widely expected to be back down again. So where does
all this lebar Beleaguet Economy Info Metric CEO Brad Olsenbacher.
This Brad, very good morning to you. Good morning, and
I think congratulations and order. I think last time we talked,
you saw growth growth, it was what do you see
for Q two?

Speaker 2 (00:21):
Well, you're right, I mean, numbers at the moment don't
look all that good for Q two. And I think also,
I mean, yes, it was growth, but it was sort
of hiding the hurt that everyone's feeling out there. Per
capita growth was still down twenty three percent. That was
six consecutive quarters, one and a half years of activity,
where per person that's going down, so people are getting

(00:42):
smaller slice of the economic pie. I fuel then looking
at some of those industry results as well, I guess
the worry that we had it's looking for that Q
one data was that it was some of the important
pieces of the business economy that haven't been doing as well.
Construction is down, non food men, mafacturing is down, professional
services and similar are all down. That doesn't bode well

(01:05):
for general weeking like momentum, and you look at some
of the spending figures and similar coming out and it
does seem like again, really the kindly is not going
anywhere fast. I think the biggest thing is looking at
both the first figure that we got yesterday thinking about
the second quarter of the year that we're in. At
the moment, the Reserve Bank, it probably doesn't change their
view too much in either direction. It's not enough to

(01:27):
make them think they can cut earlier, but it shouldn't
be enough to make them push out any expectations any further.

Speaker 1 (01:34):
Well, what they're saying is next year for a cut.
So if they're on track and they'll run there, this
is going to plan line. So all the people who
think somehow we're getting there this year, they're wrong.

Speaker 2 (01:46):
Well, at the moment, I'd find it very hard to
believe that there'd be enough evidence for the Reserve Bank
to go they think they can cutch this year. I
mean in a sense I think you can make a
convincing argument, you and me, and then lots of other
people will probably say that there would be enough station.
But the bank that they are worried. They've sort of said, look,
we haven't met our target. We're still worried about the
persistence of inflation. We're worried about how sticky some of

(02:10):
that core, particularly domestically based pressures are, And I think
that's the sort of thing where we looked at some
of the numbers yesterday and satsan Z said, look, we're
not one hundred percent sure we're splitting up the like
tourism spending versus you know, residents spending all that well,
but overall spending in the economy, and this one is
actually easy to measure. Spending in the economy was uper

(02:30):
point eight percent in the first three months of the year.
That says that there is some parts of society, not everyone,
but some parts that are going all right. They're probably
not talking about it all that much, all of the
hurt and pain. But if that's the case in the
Reserve Bank, that they are worried that they will not
hit their target, and they will be wanting to wait
and worry quite a while longer.

Speaker 1 (02:49):
But that's their conundrum, isn't it. Because there are if
you don't have debt, bread and you've seen the travel
things and stuff, and you're after Europe for summer in July,
then that those are the people are doing well and
there's no shortage of those are they not well?

Speaker 2 (03:02):
And the thing is you've got about a third of
the population that renters that are being hit with you know,
high cost generally and also some of the fastest rental increases.
Are you going back to the nineties. You've got mortgage
holders of course, are being hit very very hard and
facing all the other general inflation, the last dirt the economy.
Don't got their houses freehot, they're not paying any more

(03:22):
good rates. The only thing that's really dictating what happens
to them is if they're putting their money into a
term deposit and so they've got that sort of money,
then yeah, maybe sure they're doing a bit of that,
but like you say, they're also spending. And that sort
of area where there seems to be enough businesses that
are still able to put up prices. I mean, I
saw one again the other day, one of the talent
communications companies putting up their prices again at a time

(03:43):
when we're all being told to pull back. So it's
still happening out there, and it's happening enough that it's
causing that worry.

Speaker 1 (03:49):
You're a good man, you have a good weekend. We'll
catch up, so appreciate it very much. Brad Olson, who
is the Informetric's chief executive with us this morning, of course.

Speaker 2 (03:56):
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