Tony Alexander

Economic Commentaries

Sporadic 13 March 2018

Tuesday March 13th 2018

The NZ economy has grown strongly these past four years and factors supporting further strong, though slightly slower, growth are numerous. What could go wrong? In this issue of Sporadic we look at some of the blind spots which businesses might have in an economy increasingly constrained by lack of resources rather than customers.

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Sporadic 21 February 2018

Wednesday February 21st 2018

In this issue I take a look at Bitcoin and the block chain, the long-term trend for the NZ dollar, and interest rate prospects.

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Sporadic 7 February 2018

Wednesday February 7th 2018

New Zealand’s labour market is very tight. Wages growth remains muted but badly needs to accelerate so businesses without pricing power will close down and people can move to positions where their output will be worth more, economic growth can accelerate, and average incomes can rise – especially through the all-important cross-pollination of ideas and processes central to much business growth these days.

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Sporadic 25 January 2018

Thursday January 25th 2018

Having decided to cease publishing the Weekly Overview we have returned to producing Sporadic. This well received publication last appeared in 2015 and looks at specific issues in the economic sphere with no set timetable for release. It appears sporadically! This issue looks at key factors driving the NZ housing market.

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Sporadic 20 September 23 2015

Wednesday September 23rd 2015

Summarised Outlook and Situation Report

Growth in the NZ economy has slowed recently and business and consumer confidence levels have fallen. Risks internationally have shifted further to the downside – most notably with regard to China – and with the Federal Reserve backing away substantially from signalling they will raise rates shortly we need to consider how we could be living through the 1950s – 1060s again with sustained low interest rates. This outlook means ongoing support for housing markets around New Zealand though currently measures to slow Auckland’s pace of price rises are working and investors are flocking to the more affordable regions for a period of catch-up repricing.

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Sporadic 19 September 10 2015

Thursday September 10th 2015

RBNZ Almost Back To Square One

The Reserve Bank met expectations this morning by cutting the official cash rate another 0.25%. Come the end of October they will probably have unwound all of last year’s tightening – thus reversing rate rises for the second time post-GFC. Other central banks like the RBA, ECB, and Riksbank have also reversed rate rises as the post-GFC world is producing far lower inflation than traditional economic models have suggested. those models unfortunately no longer work and as we have warned for over five years now you need to be very careful about paying too much attention to forecasts of interest rates – and perhaps most other economic variables. Build flexibility and resilience into your business operations.

In this Sporadic issue number 19 I take a look at a long list of reasons why forecasting accuracy has gone out the window.

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Sporadic 18 – September 2 2015

Wednesday September 2nd 2015

Some Perspective On China

Things have slightly settled down in sharemarkets (slightly), so here are some thoughts on what is happening in China, plus some comments on dairying and a reminder of the housing boom spreading out of Auckland into the regions – except Christchurch.

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Sporadic 17 August 17 2015

Monday August 17th 2015

Undervalued Regional Housing Markets

We have reached the point in the housing cycle when investors and frustrated first home buyers look outside of Auckland for more bite-sized houses rather than the too big to chew Auckland ones. The movement this cycle will be accentuated by the removal of expectations that interest rates will be rising anytime soon, and the fact that rates are at their lowest levels since the 1960s. Slightly rising unemployment won’t crimp this regional shift much, especially as the dairy boom never produced much jobs growth off the farm anyway. So how do you assess where to look/ there are many factors to consider and in this issue of Sporadic I throw into the mix just one factor – current prices relative to long-term trends against the country as a whole. You can look at the graphs and form your own opinion as to which parts of the country seem most overdue for a period of catch-up.

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Sporadic 16 July 30 2015

Thursday July 30th 2015

Insulating Factors Helping

The sharp fall in dairy prices happening at the same time as falls in business and consumer confidence readings has led some people to predict recession and further large falls in interest rates and the exchange rate. However ahead of our last two recessions in New Zealand both interest rates and the exchange rate rose sharply to high levels. This time both are falling. In additionall, when the dairy payout fell by 32% in 2003 the economy kept growing over 4%. The over 50% payout decline from the peak two season’s ago is bigger this time around, but it is associated with recent farm debt growth of 6% and not the 25% peak back then. Thus while dairying regions are going to feel pain this coming year, there are many mitigating factors and recession for NZ remains a low probability outcome – though not an impossibility.

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Sporadic 15 July 23 2015

Thursday July 23rd 2015

An Update On The Economy

In this issue of Sporadic I take a look at
• the easing of monetary policy this morning,
• how dairying is suffering but the woe is good for many other sectors and this means NZ growth is likely to continue,
• review some of the recent data releases,
• look at why legislation banning foreign house buying could be useful,
• look at why Chinese are buying property off their mainland,
• and reproduce part of the official 2002 NZ government apology to Chinese for discriminatory policies of the nineteenth and early twentieth centuries.

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