Here’s my newsletter and podcast curating the morning’s news and analysis, back by popular demand for paying subscribers only. Briefly in Aotearoa’s political economy around housing, climate and poverty on Tuesday, February 17:
The jobs-heavy services sector showed more expansion overall in January, BusinessNZ-BNZ’s PSI survey showed yesterday, but at a slower rate with fewer jobs and lower growth in new orders.
Retail sales through debit and credit cards also fell again in January in total, in inflation-adjusted terms and in per-capita terms, Stats NZ reported yesterday, extending the retail recession into a 12th year.
House sales volumes fell 5.4% in seasonally adjusted terms in January from December, REINZ reported yesterday, while prices fell 0.2% in the month and are down 0.7% from a year ago.
In my view, the data on retail spending, jobs, real incomes and housing equity are increasing the chances the ‘green shoots’ of better business confidence and manufacturing don’t convert into voters ‘feeling’ the economic recovery enough to emphatically award the Government a second term in our housing-market-with-bits-tacked-on.
In my view, that’s because forecasters and Treasury haven’t taken into account how important a stagnant housing market and lower real incomes after food, power and rent costs are for household spending and business investment.
The bottom line: An economy powered for 30 years by leveraged and tax-free house price inflation can’t handle the truth that another trebling of prices isn’t possible again. That’s because interest rates can’t fall again by nine percentage points, household debt can’t treble again relative to disposable incomes, and employment growth from a 15 percentage point increase in workforce participation can’t be repeated in an ageing population.
Elsewhere in the news last night, 1News’ Verian poll showed support for both Labour and National falling three and two percentage points respectively in the last month, while NZ First rose one to 10% and the Greens rose four to 11%. The governing coalition would still have enough for a second term on these numbers.
In news from overseas overnight, Iran and the US are showing few signs of compromise on the eve of nuclear talks as a second US aircraft carrier steams towards the Persian Gulf (Reuters), while fresh data shows the climate warming at an accelerating pace (Reuters).
