{"id":591405,"date":"2026-09-05T23:20:11","date_gmt":"2026-09-05T23:20:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/591405\/"},"modified":"2026-09-05T23:20:11","modified_gmt":"2026-09-05T23:20:11","slug":"economists-say-the-recovery-has-resumed-do-you-believe-them-liam-dann","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/591405\/","title":{"rendered":"Economists say the recovery has resumed… do you believe them? \u2013 Liam Dann"},"content":{"rendered":"

This next bit would probably work better as a late-night news show video montage of soundbites. <\/p>\n

You\u2019ll just have to imagine that as you read this snapshot of upbeat economic consensus \u2013 all released in the past week.<\/p>\n

Reserve Bank of New Zealand (RBNZ) Governor Anna Breman: \u201cNew Zealand\u2019s economic recovery has most likely resumed.\u201d NZ Institute of Economic Research senior economist Ting Huang: \u201cCautious recovery resumes as fuel prices ease.\u201dANZ chief economist Sharon Zollner: \u201cData this week painted a picture of an economy that continues to recover.\u201dKiwibank chief economist Jarrod Kerr: \u201cNew Zealand\u2019s recovery is underway.\u201dWestpac chief economist Kelly Eckhold: \u201cDespite a rocky few months, the recovery is resuming, and the outlook is encouraging.\u201dASB senior economist Mark Smith: \u201cThe recovery is expected to strengthen and broaden.\u201dBMI (a unit of Fitch Solutions): \u201cThe recovery appears to have resumed after weakness earlier in the year, supported by robust export performance and resilient demand from trading partners.\u201dBusinessNZ chief executive Katherine Rich: \u201cNew Zealand\u2019s economic recovery is gaining real traction.\u201dS&P Ratings analyst Anthony Walker: \u201cNew Zealand\u2019s economic growth outlook is improving after a tepid period\u201d.Infometrics principal economist Nick Brunsdon: \u201cNew Zealand\u2019s economic recovery advanced further in the June 2026 quarter, despite headwinds from the Iran War.\u201d <\/p>\n

I might have missed a few, but you get the picture. <\/p>\n

Whoa… let the good times roll…<\/p>\n

I should note that I clipped some qualifying clauses. Economists like to add words such as \u201cpatchy\u201d and \u201cslow\u201d and \u201cdata-dependent\u201d.<\/p>\n

Regardless, I think we\u2019ve got a consensus that the recovery is underway again and things will get better from here.<\/p>\n

What\u2019s caused the shift in outlook? <\/p>\n

It\u2019s pretty subtle, to be honest. Some slightly better-than-expected inflation data, a small lift in business confidence, the ongoing strength of the export commodity boom.<\/p>\n

The biggest factor has been economists feeling the confidence shock from the Iran war has played through.<\/p>\n

Nothing\u2019s been resolved, but oil prices are bouncing around between US$80 ($135) and US$100 a barrel.<\/p>\n

We\u2019ve all kind of adjusted to that.<\/p>\n

But I think there is still a disconnect between what the economists are saying and how the average Kiwi is feeling about the economy.<\/p>\n

Breman spelt it out last week.<\/p>\n

\u201cSo far, household spending has been the missing piece of the recovery,\u201d she said.<\/p>\n

\"ReserveReserve Bank Governor Anna Breman says New Zealand\u2019s economic recovery has most likely resumed. Photo \/ Mark Mitchell<\/p>\n

\u201cWeak income growth, job insecurity, falling real house prices, and higher fuel costs have weighed on household spending.\u201d<\/p>\n

The RBNZ had noted that Kiwis were saving more, she said.<\/p>\n

\u201cSpending has been less than disposable income growth, and saving has actually increased.\u201d<\/p>\n

In other words, many consumers have actually seen their financial position improve in the past year, but they are too nervous to relax and enjoy it.<\/p>\n

It\u2019s our fault!<\/p>\n

\u201cLooking ahead, we expect spending to gradually strengthen as inflation falls and real income rises,\u201d Breman said.<\/p>\n

\u201cStronger consumption will broaden the recovery, particularly in the services sector. [That is] important for job growth because the services sector employs over 70% of working New Zealanders.\u201d<\/p>\n

We can see this missing piece in the recovery puzzle when we look at the latest consumer spending data and confidence surveys.<\/p>\n

Consumer confidence is still very low and eased back in the ANZ Roy Morgan survey for August.<\/p>\n

Spending is still very subdued but has been creeping up slowly for a few months, according to Stats NZ electronic card transaction data.<\/p>\n

When it comes to looking for signs of a consumer pick-up, I\u2019m more inclined to trust actual spending data than people\u2019s opinions. <\/p>\n

Surveys that involve people self-reporting are almost always biased.<\/p>\n

Almost everyone thinks they are of above-average intelligence. <\/p>\n

Even those people who are probably above average in intelligence overestimate their own abilities. <\/p>\n

A 1977 study found 94% of university professors rated themselves as above-average teachers.<\/p>\n

People show an optimism bias when they assess how good they are or how healthy. <\/p>\n

Research shows they over-report good behaviour (things such as voting, charitable giving, exercise) and under-report \u201cbad\u201d behaviour (like drinking, smoking and overeating).<\/p>\n

Let\u2019s face it, most of us live in a blissful state of self-delusion.<\/p>\n

But when it comes to the economic outlook, suddenly we are pessimists. <\/p>\n

In 2024, the Keenan Institute of Private Enterprise in the US reported on the disconnect between consumer sentiment and the actual economic indicators.<\/p>\n

It noted the so-called misery index, which sums unemployment and inflation rates, was at a historically low level, but so too was consumer sentiment.<\/p>\n

I think this disconnect will linger in New Zealand over the next several months.<\/p>\n

About a month ago, I made a big call: it\u2019s too late for the economy to save National now.<\/p>\n

I\u2019m always happy to admit when I\u2019ve got something wrong. <\/p>\n

Regardless of the political implications, I\u2019ll always take a stronger economy sooner, thanks.<\/p>\n

But I don\u2019t think I\u2019m wrong yet.<\/p>\n

I still think that Christopher Luxon and Nicola Willis, just like all the economists, have a job ahead of them to convince people that things are really coming right this time. <\/p>\n

Big, ugly lagging economic data such as unemployment and company liquidations still cast a long shadow over sentiment.<\/p>\n

This is the stuff that keeps rising for months, generating headlines, even after a recovery begins.<\/p>\n

Economists expect these stats to be slow to turn, so they can look through them. <\/p>\n

But combined, as they are, with public scepticism and the PTSD of the past three years, there is a risk they delay consumer confidence and the bounce in spending this recovery needs.<\/p>\n

That\u2019s a risk the RBNZ will need to be alert to as it weighs further interest rate hikes this 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. He joined the Herald in 2003.<\/p>\n

Catch up on the debates that dominated the week by signing up to our Opinion newsletter<\/a> \u2013 a weekly round-up of our best commentary.<\/p>\n","protected":false},"excerpt":{"rendered":"This next bit would probably work better as a late-night news show video montage of soundbites. You\u2019ll just…\n","protected":false},"author":2,"featured_media":591406,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[1970,138,40922,6309,13488,6871,20409,111,139,69,291188,1881,1140,5659,11555,223,2846,197],"class_list":["post-591405","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-believe","tag-business","tag-dann","tag-do","tag-economists","tag-has","tag-liam","tag-new-zealand","tag-newzealand","tag-nz","tag-pssst","tag-recovery","tag-resumed","tag-say","tag-started","tag-the","tag-them","tag-you"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/591405","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=591405"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/591405\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/591406"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=591405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=591405"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=591405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}