The full pdf version of the Weekly Overview is contained here.
Weekly Overview 21 September 2017
Thursday September 21st 2017
This week we note the economy’s 0.8% growth during the June quarter, consider the impact in financial markets of Saturday’s outcome, and reiterate again to first home buyers the way some things have turned in their favour recently.
This week I’ve been on the road giving talks so the Overview is embarrassingly short at not even one page of text and it is only really relevant to residential real estate agents wondering what their sales revenue might look like in a year’s time.
Opinion polls show near equal party vote support for National and Labour. As Labour offer change from the National government economic management of the past nine years we analyse their policies this week in the areas of monetary, fiscal, housing, workplace, and immigration.
This week we consider what happened in the economy when Labour were elected to power in 1999 after an extended period of a National government. We then consider nuclear war, LVRs, and question the four decade-long common way of talking about the NZ dollar in terms of it trending inexorably down long-term and needing to fall. Enjoy!
This week we look at real estate data and comment on the chances that the Reserve Bank will soon ease LVR restrictions. They are not high. The rules were announced on August 2013. Comparing now with then, although house price inflation has slowed nationwide from 6.3% to 5%, (Auckland 11% to 2%) lending growth is higher at 7.7% from 5.2%, and imbalances clearly persist between demand and supply growth in Auckland.
We start this week’s Overview doing what everyone else is doing today which is commenting on the Reserve Bank’s decision to do nothing. But then we take a look at the way in which so many things globally and within New Zealand have turned out the complete opposite of either what was expected or what was assumed. These include Peak Oil changing to Peak Demand, the terms of trade trending up and not down, extraordinarily low interest rates being bad for young buyers rather than good (we were better off buying our first houses when rates were at 18.5%) and so on. Enjoy this departure from the usual stuff.
This week we take a look at yesterday’s labour market data noting that although the Kiwi dollar fell after the rnumbers on reduced expectations of monetary policy tightening, fundamentally the data show a strong jobs market. We also look at house building, business confidence, and real estate activity in Auckland before noting a recent Treasury paper on superannuation and discussing yet again the way firm economic and jobs growth do not much drive higher inflation and interest rates these days.
This week’s Overview is a short one at just three pages. We take a look at how few businesses say they lack customers, but risks of problems nonetheless are growing for a variety of reasons. We also note the rise in the Kiwi dollar back above US 75 cents. Two and a half months ago the rate was 68 cents.
This week we take a look at low inflation and the fairly obvious interest rate implications, the relatively unsurprising scaling back of earlier optimistic expectations that the greenback will soar and we will decline rapidly against it, and some thoughts on retirement saving.