Does the data tell the whole story? Getty Image
The almost universal confidence that economists and international investors have in New Zealand's economic outlook is starting to make me nervous.
Don't get me wrong. I'm glad to see it.
For the past few weeks, this is where I've looked for comfort as we battle with the stresses and difficulties of the Delta outbreak.
And I see the irony.
If I'm getting sick of being told that the economy is all fine, imagine what it feels like for Auckland business owners right now.
Last week, GDP data for the three months to June 30 came in way stronger than anyone dared forecast - despite everybody knowing the economy was running hot.
At 2.8 per cent for the quarter, it was more double the market's expectation.
After a year of watching our economy outperform the best expectations of economists, that bit didn't really shock me.
But the bullish market reaction did.
As of Thursday, the market was pricing in near 50 per cent odds that the Reserve Bank will opt for a 50 basis point rate hike on October 6.
At the start of this week, the market was pricing in just a 5 per cent chance.
That's a mind-melting degree of confidence from where I'm sitting in this seemingly endless level 4 lockdown.
All our local economists now expect a rate hike of 0.25 per cent, followed by a series of hikes through the next six months.
The GDP number was just the latest piece of evidence supporting the view that our economy will be humming again in the fourth quarter and struggling once again with issues like inflation and labour shortages.
Just to spell it out: economists still believe the Reserve Bank needs to slow this economy down because the pandemic won't.
This is what the numbers say even as the anecdotes and stories of business pain and failure continue to mount.
New Zealand's economy is a macro beast. It runs on our enormous export receipts and domestic consumer confidence underpinned by a never-ending property bubble.
It's a sad fact that we could lose many of our most loved businesses - cafes, restaurants, pubs and theatres, book shops and record stores - without making too much of a dent in our GDP performance.
These are the parts of the economy that bring colour and life to our cities.
But even the latest ANZ Business Outlook snapshot - a survey the Left has long dismissed for being self-selecting and politically biased towards gloomy thinking - shows confidence hold remarkably firm.
As ANZ chief economist Sharon Zollner notes, the early numbers for the September Business Outlook saw business confidence increase, despite Auckland remaining in level 4 lockdown over this time.
"Business confidence is holding up at very high levels compared with the years immediately before Covid, and a net 18 per cent of firms are expecting to increase their activity over the next 12 months."
I guess there is still a silent majority of firms able to keep their horizons high - and that is good news.
Macro-economic data with its wide-lens view always runs the risk of diminishing very real pain that many business people are dealing with.
There's plenty that's been said about the uneven nature of the economic recovery. We know that some businesses are struggling much more than others.
And it's not just sectors like tourism, hospitality and events doing it tough - even though they are taking the greatest financial hit.
The dual realities of this pandemic require us to shift from an economy that is growing so fast that it's in danger of overheating, to one that is in a deep recession - albeit artificially imposed.
Then, hopefully, we bounce straight back to boom times.
That's a huge psychological leap to have to make repeatedly.
I worry that there might be some sort of intangible economic hangover to all this, some version of PTSD for the business community.
We need to foster an economy that encourages business investment and entrepreneurship and that's why I'm hopeful we'll see plenty more support for small businesses from the Government in the coming weeks.
Perhaps it all just looks worse from Auckland right now.
So I'm reminding myself that individual experience isn't all it's cracked up to be when it comes to measuring reality.
A favourite fact: the entire rainbow of colour observable to the human eye only makes up a tiny portion of the known electromagnetic light spectrum – about 0.0035 per cent.
You can visualise that by imagining it as distance if you like that sort of thing.
Humans have a visual perspective on the universe that is 3.5km wide relative to a potential view that stretches for 100,000km - twice the circumference of the Earth.
That's just how little our eyes can see.
We have a very limited view, unless we trust in the science - which is what allows us access to all that ultraviolet and infrared energy along the light spectrum.
Just as I retain trust in the science around dealing with Covid, I will keep my focus on those big encouraging economic numbers.
If nothing else, the confidence that those big numbers underpins will play a vital role in providing a strong path to economic recovery.
It will be vital in supporting those businesses currently doing it so tough.
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