Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
We follow the protagonist through their cynicism, confronting the sad and depressing events of the year but then somehow, some revelation or miracle helps them find the light and see the true spirit of Christmas.
I stared for a long time at Thursday’s strong GDP number, wondering if there was any good reason to be cheery about that.
It just felt like a reminder of how ill-prepared Kiwis were for the big-belt tightening of 2023. At least they were until November when the Reserve Bank Governor hit them with his forecast for a four-quarter recession.
Reserve Bank Governor Adrian Orr hasn’t always hit the mark with his communications this year but he did with that last Monetary Policy Statement.
I was initially a bit scornful (the way I am when my favourite bands suddenly get popular). I assumed he was just stating the obvious.
But he has successfully sold an important narrative that seems to have hit home with middle New Zealand.
We should hope it helps him do the job of rebalancing the economy without the need for all the rate hikes the RBNZ is promising.
This is a period of historic monetary policy tightening - unprecedented in its speed. We’re going light on the fiscal austerity but there is still some heavy medicine headed for our economic system in 2023.
We don’t really know how bad the side effects will be yet.
Even the Government has shifted its tone now. I think Finance Minister Grant Robertson has known what’s required for a while but has had to fight some internal political battles.
He was quick to point out on Thursday that in the third quarter, government spending fell as a percentage of total consumption.
It wasn’t down by much, 1.8 per cent (although it was also flat in the quarter before that). And of course, it is coming off the previously elevated levels of stimulus spending.
Just the extent to which it was emphasised in the Government’s official press release was a reminder something has changed, though. This approach was just a day after Robertson’s Half Year Economic Fiscal Update (HYEFU) surprised on the austere side.
We’re on our way into the storm folks. What will happen? How bad will it be?
Interest rates will peak early next year, inflation will keep falling, and house prices too.
Markets will bounce back but economic growth will slow. Unemployment will rise and we’ll find ourselves in a technical recession.
That’s the broad consensus anyway.*
And government will change.
That is to say, either National will win or Labour will successfully reinvent itself and change enough to win again.
Both outcomes are still possible. Calling the election this early would be silly, an exercise in psychological projection for the writer.
Like saying the All Blacks will win the world cup ... or they won’t, depending on what you think of Ian Foster.
Come on.
When it comes to the economy, what does a win even look like?
If we beat inflation without causing high levels of unemployment that will be a win. If we don’t, it won’t.
Either way, we’ll be better off than in some other place where things are worse.
Now I do sound pretty jaded. Cheer up mate, it might never happen.
I think a lot of people struggle mentally through December, I know I do.
The stress of the year builds up and anxiety or depression can become quite physical in their symptoms.
The superficial Christmas cheer all around us only makes it worse.
I’ve said it before but I suspect the pandemic has been psychologically damaging in ways that we’re not really going to understand for years.
The Reserve Bank under Governor Adrian Orr has warned of a recession and more rate hikes in 2023. Photo / Mark Mitchell, Herald montage
It’s added a layer of aggression and conflict right across society. Sadly, it manifests most violently at the most economically disadvantaged end.
Now we’re supposed to believe that 2023 be worse. That is a grim thought.
I’m over all the annual previews and reviews. I think it might be time to focus on the present, or at least the immediate and highly predictable future.
I’m going to see my extended family and friends. I’m going to eat too much and watch my kids hang out with their cousins.
I’m going to the beach to camp and swim and start drinking in the afternoon.
Those economic numbers might look worse next year but I don’t think they’ll be historically bad.
They won’t be as bad as 1987 or 2008 or the projections we first faced in those heart-in-mouth days of early 2020.
Regardless, the best way to cope with what comes our way might just be to stop caring for a couple of weeks.
It seems to me, as my past grows ever longer and my future shorter, that it is ever more important to stay grounded in the present.
I’ve got this feeling that it’s later than it seems. But now I’m going to go and watch It’s a Wonderful Life.
*Disclaimer: I have written a proper economic outlook column, with actual numbers, to run in the new year.
