They say nothing about inequality\/distribution of wealth, natural resources available, mitigation factors for climate change, perceived happiness, and so the list goes on.<\/p>\n
Secondly, why do people here expect we should have such a high standard of living as of right?<\/p>\n
We are a very small country, producing fluctuating value commodities which are subject to overseas whims and political actions, currency values, and rely heavily on imports to maintain our living standards.<\/p>\n
Despite our problems, I like living in New Zealand and don\u2019t really care whether we are 19th, 22nd or 37th in the world ranking of an outdated measuring system.<\/p>\n
Regards,<\/p>\n
Garry B.<\/p>\n
Thanks, Garry, this is the perfect question for the day before a hotly anticipated GDP (gross domestic product) data release.<\/p>\n
I agree with you to the extent that I think there is too much emphasis put on topline GDP.<\/p>\n
The data itself suffers from being both out of date (it\u2019s almost three months old by the time we get it) and provisional (it almost always needs to be revised).<\/p>\n
Topline GDP is also an aggregate measure which is inflated by population growth.<\/p>\n
How we perceive growth in the economy is subjective. <\/p>\n
As discussed a couple of weeks ago<\/a>, using GDP per capita can give us a better read on the underlying progress the economy is making.<\/p>\n I always try to include per capita GDP growth in the coverage.<\/p>\n Then there is the question of what it measures and what it doesn\u2019t.<\/p>\n Even per capita GDP doesn\u2019t accurately capture wealth distribution.<\/p>\n If inequality is increasing, then it may be that plenty of people are going backwards in an economy which is technically growing.<\/p>\n There is actually another economic metric for inequality (the Gini coefficient), although it is a lot more complicated to measure.<\/p>\n As you point out, GDP doesn\u2019t tell us about the health of our nation or the overall happiness of its people.<\/p>\n But as with inequality, these more nuanced measures of human life are complicated and difficult to measure accurately.<\/p>\n Tomorrow\u2019s the big day<\/p>\n Ironically, I\u2019ll be on the front lines of the media coverage reporting GDP when it is released tomorrow at 10.45am.<\/p>\n I will, as always, try and get as much context in as I can but the weight of audience demand doesn\u2019t allow much scope to swim against the tide.<\/p>\n In other words, I can\u2019t ignore the headline number.<\/p>\n For better or worse, people really seem to like GDP as a metric.<\/p>\n I think they like it because it is simplistic and reads like a de facto scorecard that allows us to compare economics like sports. We put our national progress on league tables like we were competing for Olympic medals.<\/p>\n You\u2019re right that it is all a bit arbitrary as to whether we are 19th or 37th or whatever.<\/p>\n How we feel about our standard of living is also relative to our expectations and our definitions of wealth.<\/p>\n But I think people are happiest \u2013 regardless of wealth \u2013 if they have a sense that they think things are improving.<\/p>\n It\u2019s a defining human trait to try and improve things.<\/p>\n So despite all the obvious flaws, I think there are some good reasons to cover it well.<\/p>\n GDP does provide a benchmark and guidance on whether our economy is growing or contracting.<\/p>\n It doesn\u2019t paint a rich picture of our economy but it does provide an important baseline.<\/p>\n I\u2019ll leave the final word to Simon Kuznets, the Russian-born economist who moved to the US in the 1920s and effectively invented GDP \u2013 or at least codified it in the form we now use.<\/p>\n He was always sceptical about using his measurement system to assess the overall welfare of people.<\/p>\n \u201cThe welfare of a nation can scarcely be inferred from a measurement of national income,\u201d he said.<\/p>\n \u201cDistinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what.\u201d<\/p>\n What the headlines are screaming tomorrow, we should keep his words top of mind.<\/p>\n GDP expectations<\/p>\n For the record, economists expect new GDP data<\/a> to show a strong rebound back to growth in the third quarter of the year.<\/p>\n The numbers due on Thursday from Stats NZ are expected to show close to 1% growth in the economy for the three months to September 30.<\/p>\n The release will likely include revisions to the grim second quarter result (-0.9%).<\/p>\n House prices still falling<\/p>\n The last Real Estate Institute of New Zealand (REINZ) property price and volume stats for the year show the market is not yet in recovery<\/a>.<\/p>\n The figures showed that in the last two months, the seasonally adjusted REINZ House Price Index fell 0.3% and sales volumes fell 4.2%.<\/p>\n November\u2019s activity had been weaker than the economists had expected.<\/p>\n ANZ economists said: \u201cSales volumes are back below their long-run historic[al] average for this time of year\u201d, referring to a lack of bounce from spring.<\/p>\n Based on REINZ data and Stats NZ\u2019s Consumers Price Index (from October 2021 to the latest quarter to September 2025), house values are now down 31.3% nationally in real or inflation-adjusted terms since the market peak in late 2021.<\/p>\n Economists still expect a pick-up next year. REINZ figures showed Canterbury, Otago and Southland are already in positive territory.<\/p>\n But the rest of the country \u2013 Wellington and Auckland in particular \u2013 are still working through an oversupply of properties for sale.<\/p>\n Treasury is more gloomy, forecasting just 1.9% growth nationwide in 2026.<\/p>\n Good news for first-home buyers, who will hopefully continue to enter the market in elevated numbers.<\/p>\n Green shoots watch<\/p>\n Here\u2019s the last weekly dose of economic good news for the year.<\/p>\n As discussed, tomorrow\u2019s GDP doesn\u2019t really count because it isn\u2019t forward-looking.<\/p>\n Property prices (above) are clearly a mixed story depending on whether you\u2019re a buyer or seller.<\/p>\n On Tuesday, we also had the monthly Selected Price Index<\/a> (partial inflation measure) for November. It showed food prices continue to fall (down for each of the past three months). But overall, the rate of price rises was still higher than economists hoped, so we can\u2019t claim that as a green shoot.<\/p>\n Last Friday, the November Performance of Manufacturing Index (PMI) showed a continued improvement.<\/p>\n The seasonally adjusted PMI for November was 51.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).<\/p>\n This was 0.2 points higher than October, but still below the average of 52.4 since the survey began.<\/p>\n \u201cThe PMI has seemingly settled above the breakeven 50 mark. Nonetheless, we want to see more upbeat outturns from this survey and the Performance of Services Index, to provide us with some comfort that the expected lift in third quarter GDP can be sustained into the fourth quarter.\u201d<\/p>\n The less said about the sister survey \u2013 the Performance of Services Index \u2013 the better. It did not deliver on Monday.<\/p>\n In fact it has actually slipped backwards. No green shoots there yet.<\/p>\n Seek NZ numbers<\/p>\n Much more encouraging were the latest Seek NZ job advertisement figures<\/a>.<\/p>\n They have now shown five consecutive months of improvement.<\/p>\n Job ads for the last three months (September\u2013November) are up 3.9% on the previous three months (June\u2013August).<\/p>\n \u201cWe still expect the labour market to lag the broader economic recovery,\u201d said BNZ economist Matt Brunt.<\/p>\n \u201cJob ads are best viewed as a leading indicator for the labour market. There can be significant delays between a new job posting, hiring processes, and when employment actually commences. It can take a while for an upturn in job ads to appear in official labour market data.\u201d<\/p>\n Annual job ad growth for the last three months was highest for casual\/vacation (15.6%) and contract\/temporary (9.9%) work.<\/p>\n \u201cIt is not surprising to see a preference for fixed-term over permanent hiring as firms are somewhat cautious around the pick-up in demand,\u201d Brunt said.<\/p>\n Last of the year<\/p>\n This is the last edition of Inside Economics for 2025. However, we\u2019ll run a \u201cbest of series\u201d over the summer featuring some of the less time-sensitive reader questions.<\/p>\n Best wishes for the holiday break and good luck with all those barbeque and campfire economic debates.<\/p>\n Keep the questions coming. I\u2019ll be back in the new year.<\/p>\n Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. <\/p>\n He joined the Herald in 2003. To sign up to his weekly newsletter, click on your user profile at nzherald.co.nz<\/a> and select \u201cMy newsletters\u201d. <\/p>\n For a step-by-step guide, click here<\/a>. If you have a burning question about the quirks or intricacies of economics send it to liam.dann@nzherald.co.nz<\/a> or leave a message in the comments section.<\/p>\n","protected":false},"excerpt":{"rendered":"They say nothing about inequality\/distribution of wealth, natural resources available, mitigation factors for climate change, perceived happiness, and…\n","protected":false},"author":2,"featured_media":187253,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[836,1443,14772,138,14107,5782,14769,11774,10668,1951,219,14768,2082,12410,305,191,2944,296,14774,185,685,12514,14770,14776,6096,14771,130,111,43,6042,139,5006,69,691,9831,14773,14777,14775,7806,544,199,1361,223,686,6041,1845],"class_list":["post-187252","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-836","tag-about","tag-burning","tag-business","tag-click","tag-comments","tag-deeper","tag-dive","tag-economic","tag-economics","tag-economy","tag-every","tag-for","tag-gdp","tag-have","tag-here","tag-inside","tag-into","tag-intricacies","tag-is","tag-last","tag-leave","tag-leftfield","tag-liamdannnzheraldconz","tag-message","tag-missed","tag-more","tag-new-zealand","tag-news","tag-newsletter","tag-newzealand","tag-not","tag-nz","tag-or","tag-question","tag-quirks","tag-section","tag-send","tag-sign","tag-some","tag-take","tag-that","tag-the","tag-week","tag-weekly","tag-welcome"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/187252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=187252"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/187252\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/187253"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=187252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=187252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=187252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}