Economic commentator Bernard Hickey warns the conditions that fuelled those past recoveries have changed, and relying on history repeating itself could be a costly mistake.<\/p>\n
Speaking on The Front Page<\/a> podcast, Hickey says: \u201cThe trouble is this time around, for four years now, prices have been flat or falling, and they\u2019re falling again.\u201d<\/p>\n Hickey believes Treasury\u2019s economic optimism is misplaced, arguing its modelling has failed to keep pace with changes in the economy.<\/p>\n \u201cTreasury haven\u2019t kept up with the changes in how our economy has worked, and they have a mental model which says an economy is full of consumers and businesses who respond to things like interest rates and the exchange rate.<\/p>\n \u201cThose models are wrong.\u201d<\/p>\n Hickey says Treasury has forecast a rebound in consumer spending and in business investment, \u201cbut we haven\u2019t seen it for three years. They\u2019ve been wrong for three years\u201d.<\/p>\n \u201cThey were forecasting 200,000 jobs growing for years and years, hasn\u2019t happened. They\u2019re forecasting it again. So why do we trust them or believe it this time around?\u201d<\/p>\n When a government reduces its share of spending in the economy, Hickey says the private sector needs to step forward to bridge the gap.<\/p>\n \u201cThey assumed rightly between 2000 and 2020 that [the private sector] would, but that was six years ago.\u201d<\/p>\n Alongside a lacklustre housing market, Hickey says there are other pressures making an imminent economic recovery even less likely. <\/p>\n \u201cHigher interest rates, higher energy costs, costs of living, this is really dampening down on the consumer and it means that as the Government pulls back, there\u2019s nothing to go into the gap.\u201d<\/p>\n Hickey says the New Zealand economy always feels good when the housing market is thriving, but now we\u2019re experiencing what happens when the same market falls.<\/p>\n \u201cIt\u2019s brutal on the way down. Feels great on the way up. It\u2019s like the worst type of rollercoaster, you know? Whee! And then you throw up on the way down.\u201d<\/p>\n Listen to the full episode<\/a> to hear more on:<\/p>\n Why Hickey believes Wellington is \u201cground zero\u201d for New Zealand\u2019s economic struggles.Why politicians are reluctant to tackle the growing cost of New Zealand Superannuation.The role health and social services play in keeping New Zealand\u2019s economy moving<\/p>\n The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. <\/p>\n You can follow the podcast at iHeartRadio<\/a>, Apple Podcasts<\/a>, Spotify<\/a> or wherever you get your podcasts.<\/p>\n","protected":false},"excerpt":{"rendered":"Economic commentator Bernard Hickey warns the conditions that fuelled those past recoveries have changed, and relying on history…\n","protected":false},"author":2,"featured_media":629142,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[3246,138,11539,4480,10668,219,5903,37078,7469,1668,266,3499,3339,6721,225,3556,111,139,69,22213,28630,2171,15483,1881,166672,29240,1527,8262,223,165,8229,1961,2044,17088,8218,102,14443],"class_list":["post-629141","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-both","tag-business","tag-commentator","tag-drive","tag-economic","tag-economy","tag-election","tag-fiscal","tag-forecasts","tag-front","tag-government","tag-growth","tag-housing","tag-labour","tag-market","tag-national","tag-new-zealand","tag-newzealand","tag-nz","tag-our","tag-page","tag-plans","tag-promising","tag-recovery","tag-rein","tag-relying","tag-return","tag-spending","tag-the","tag-their","tag-they","tag-this","tag-time","tag-treasurys","tag-warns","tag-with","tag-wont"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/629141","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=629141"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/629141\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/629142"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=629141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=629141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=629141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}