Brad Olsen: Infometrics Principal Economist on debt nearing $1 trillion

We are well on our way to a collective one trillion dollars in debt.

In the year to the end of May, New Zealand hit just over 870-billion in gross debt - up 5.4 percent from almost 830-billion last year.

It represents an average of just over 160-thousand dollars in raw debt for every person in the country.

At the current rate of growth, New Zealand will hit the trillion dollar landmark,  inside the next three years.

That rate has eased in the past two years as the Government has sought to curb borrowing, and the housing market has been flat.

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Episode Transcript

Speaker 1 (00:00):
Someone hit the alarm bell. Will your new data shows
we're on track to hit one trillion in national debt
within three years. Current debt stands at eight hundred and
seventy billion. This is across both private and public on average,
that's about one hundred and sixty three thousand per key we.
Brad Elson is Infametric's principle economist with us this morning. Brad,
good morning, Good morning. It's I mean, it sounds an

(00:21):
alarming figure, is it.

Speaker 2 (00:24):
I mean, it always feels alarming when you're sort of
talking in the hundreds of billions of dollars, and it is.
But I think as well, this is the money that
we often are using for a lot of quite important purposes.
This is what people are using when they get a
mortgage to buy a house. It's what the government uses
to invest in critical infrastructure. It's what businesses use to

(00:46):
invest in new plant and equipment. So it does sound
like a scary number, but it is important in many ways.
The challenges is our debt sustainable? Not necessarily if it's
big or small or anything else. And I guess on
metric it's fascinating to see that. You know, yes, we've
continued to see it grow that in recent times it
has been growing at a slower pace, and I think

(01:08):
that that's part of this or almost sort of economic
right sizing that we're seeing at the moment as we
go through that sort of post COVID hangover period for government,
for businesses, for households, everyone's going just how much debt
do I need? How much can I afford? And what
does that all mean coming out the other side.

Speaker 1 (01:27):
Also, we've had house prices that are either falling or flat,
which means you're not borrowing as much, which makes up
a lot of this right.

Speaker 2 (01:34):
Yes, that's definitely true, and I think that's why you've
seen for some of the household figures that things haven't
gotten quite as intense in terms of further growth as
we've seen a couple of years back. You look at
the likes of house prices at the moment still sitting, oh,
what's seventeen twenty percent below their peak. We know as
well that you know, in recent times, people haven't been

(01:57):
quite as keen to get out and buy. Yes, has
been a lift and sales over the last year, but
with those lower prices again people just trying to sort
of find the new Goldilocks zone for how much they're
willing to invest. And I think that the area that
I found most interesting was you look into some of
those sort of business investment figures, and that's an area
where you do generally actually want a bit more growth.

(02:19):
You don't want it to be completely unstoppable, but you
want to know that businesses are comfortable have access to
capital so they can invest, you know, in new manufacturing
techniques and new technology so that we can get more
productive over time. So some concerning numbers in the data,
some optimistic numbers in other places, but overall, yes, the
debt pile is getting bigger, but not at the same

(02:41):
pace it was before. And that's probably not a bad
position to be.

Speaker 1 (02:44):
In, in a word, because we are at a time
bred but how do we compare with the rest of
the world?

Speaker 2 (02:48):
Good, bad, ugly, better but still not comfortable?

Speaker 1 (02:53):
Appreciate your time. Brad Olson, Infametrics, Principle Economist.

Speaker 2 (02:57):
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