The news didn\u2019t get near the top stories of the day.<\/p>\n
We\u2019ve returned to the familiar soap opera of domestic squabbles and politics.<\/p>\n
Perhaps it will hit harder when the latest spike flows through to the petrol pumps.<\/p>\n
The panic about actually running out of petrol or diesel has also started to fade, although I\u2019m not sure the risk has changed all that much yet.<\/p>\n
Regardless, as the stalemate in the Strait of Hormuz drags on, the cost of living will certainly keep rising.<\/p>\n
The risk of stagflation \u2013 the ugly combo of inflation and economic contraction \u2013 grows.<\/p>\n
But there is no dramatic headline to crystallise that threat.<\/p>\n
In a sense, it is shocking just how unshocking the situation has become.<\/p>\n
After six years of turmoil since Covid arrived, it feels like we are becoming inured to living with a lousy economy.<\/p>\n
Inured … not a word I use every day.<\/p>\n
After I wrote it, I had to look it up to be sure I was using it correctly.<\/p>\n
It\u2019s a fancy way of saying hardened. We\u2019re becoming hardened to grim economic news.<\/p>\n
It feels like hardly anyone bats an eyelid when they hear the economy is going south again.<\/p>\n
I\u2019m not sure there was ever much confidence in the recovery talk before the war started, despite my best efforts to talk up green shoots.<\/p>\n
So, is being inured a good thing or a bad thing?<\/p>\n
It turns out it\u2019s a word with complex psychological and moral dimensions. My favourite kind.<\/p>\n
If you\u2019re an athlete like a boxer or long-distance runner, you need to become inured to getting punched in the face or the pain of extreme muscle fatigue.<\/p>\n
A surgeon needs to become inured to the gory insides of the human body.<\/p>\n
On balance, that\u2019s all good stuff. It\u2019s about becoming fit for purpose.<\/p>\n
The word pops up in the English translation of Homer\u2019s Odyssey.<\/p>\n
\u201cAnd what if one of the gods does wreck me out on the wine-dark sea? I have a heart that is inured to suffering and I shall steel it to endure that too.\u201d<\/p>\n
Odysseus was a hard bastard. He\u2019d just been through hell in the Trojan War. He doesn\u2019t care if the gods could throw their worst at him. He can take it.<\/p>\n
But of course, there is a risk in becoming inured to the point that we just accept our lot.<\/p>\n
In coping with adversity, we might cease to fight against it and give up on improving our lot.<\/p>\n
It can become a moral failing as we accept the misery around us.<\/p>\n
A soldier who has become inured to the horrors of war is probably a good soldier, but are they still a good person?<\/p>\n
Some societies become inured to political corruption \u2013 thankfully not this one yet.<\/p>\n
Americans are inured to the hyperbole of the US President, something that allows him a dangerously free rein to enact ever more radical policies.<\/p>\n
New Zealanders seem increasingly inured to disastrous weather events.<\/p>\n
Is that strengthening our resolve to fight climate change, or are we giving up?<\/p>\n
Perhaps most tragically, in my lifetime, New Zealanders have become inured to extreme poverty.<\/p>\n
In our cities, we barely give a second thought to walking past forlorn, homeless people.<\/p>\n
On an individual level, there is clearly little we can do, but our familiarity becomes acceptance and diminishes any political urgency for resolving the issue.<\/p>\n
I\u2019m old enough to remember how shocking and foreign homelessness was when I first visited cities like London and San Francisco.<\/p>\n
Finding the right balance with regard to becoming inured is one of the great human dilemmas.<\/p>\n
Meanwhile, markets have grown bored of the war, just as Pie Funds chief investment officer Mike Taylor assured me they would a month ago.<\/p>\n
The current malaise is understandable, I guess.<\/p>\n
We definitely can\u2019t afford to get stuck in a funk of gloom and inaction just because the macroeconomic conditions are bad.<\/p>\n
Businesses can\u2019t keep waiting for some hypothetical recovery. They survived till \u201925, waited for an economic fix in \u201926. Good luck telling anyone it will be heaven in \u201927!<\/p>\n
Humans are pretty good at getting used to a new status quo.<\/p>\n
But it seems worth remembering that, prior to Covid, New Zealand experienced the second-longest period of economic expansion in its history.<\/p>\n
Between 2009 and 2020, the economy did not contract \u2013 even for a single quarter.<\/p>\n
Only the golden years from 1952 to the late 1960s offered a longer period of economic growth.<\/p>\n
Business people are resourceful and resilient, and they will keep on keeping on … until they can\u2019t.<\/p>\n
But even for the businesses that are surviving and doing okay there is an opportunity cost to this extended period of low growth and contraction.<\/p>\n
Expansion plans are delayed, and investment in new technology goes on hold. Companies might not be cutting staff, but they are not hiring either.<\/p>\n
We\u2019ll see our unemployment rate stay stuck at about 5.4% when new data drops next week.<\/p>\n
Do we have to accept that a rate above 5% is now the new normal?<\/p>\n
Last week, data for March showed Australia\u2019s annual inflation rate hit 4.6%. That\u2019s before much of the oil shock had flowed through the economy.<\/p>\n
Things are better here, but not much. Annual inflation is 3.1% and expected to go much higher in the coming months.<\/p>\n
In the past five years, the inflation rate has only been within the Reserve Bank\u2019s target band (1-3%) for four quarters.<\/p>\n
The RBNZ is allowed to look through inflation based on supply shocks in the medium term. If we apply hindsight, all those medium terms are starting to add up to a very long term.<\/p>\n
Should we just be more patient? The great economist John Maynard Keynes had a good response to that way of thinking: \u201cIn the long run we\u2019re all dead.\u201d<\/p>\n
So, when does resilience simply become acceptance?<\/p>\n
I remain hopeful that this latest economic shock will play through before the year is out. I feel like there is pent-up demand in the New Zealand economy and we could see a strong bounce if we can just get a clear runway of economic conditions.<\/p>\n
But it\u2019s important that we don\u2019t drop our expectations about how a New Zealand economy should look … and still could.<\/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. He joined the Herald in 2003.<\/p>\n