How should we measure this Government's economic performance so far?

Business confidence, GDP growth, sharemarket records?

All these have been prone to use - and abuse - as barometers by both sides of the political spectrum.

I want to take a look at each of those measures.


But first, any respectable economic commentary needs a goofy metaphor to illustrate the numbers.

Rock-stars are old hat, the rugby's been a bit dull so I'm rolling with the round ball and celebrating the Football World Cup.

Bearing in mind that, at 150 days into the parliamentary term, we are just 11 minutes into this game, let's kick-off.

GDP (gross domestic product) growth numbers were the big economic news last week.

Despite plans by Finance Minister Grant Robertson to broaden the focus of economic measurement GDP will remain an important barometer of Government performance.

GDP growth came in at 0.5 per cent for the first three months of 2018. That was bang on expectations and took annual growth to 2.7 per cent.

It does indicate a slowing economy - in fact it is an economy that has been slowing for the past three quarters.

So when you look at the lower annual GDP number, the slowdown belongs - on balance - to the previous Government.


There is such a big lag between the actually economic activity and the publication of GDP data that even on a quarterly basis it is hard to attribute much change to the change in Government.

This latest figures are for a three month period that kicked off January 1 - just two months after the first coalition cabinet meeting.

And it is the nature of business that most of the activity measured will be the result of decisions and deals done prior to that.

I'd be just as sceptical - as I'm sure the Opposition would- if the Government had come in on an upswing of GDP growth and claimed the credit.

The breakdown of the GDP data suggests a slowdown in the housing market and capacity constraints hitting construction take most of the blame.

Perhaps that gloomy burst of post-election business sentiment had an some impact but lower confidence takes time to flow through to measurable activity.

On that basis, economists don't see it slowing further next quarter but they expect looser fiscal policy to kick in by 2020 boosting GDP.

The Government football team is on defence for now but it's still locked at nil all on this one.

That brings us to business confidence - which has become a bit of an obsession in political debate.

Jacinda Ardern and Grant Robertson tackled it head on at business functions earlier this year.

In response, business smiled politely, acknowledged that they seemed like fiscally responsible people, agreed we should do more about the housing crisis - then promptly went and ticked all the grumpy boxes in the next round of confidence surveys.

That's annoyed some in Government and we've seen push back. Senior minister David Parker recently tried to discredit the accuracy of the surveys.

Based on my conversations with business I'd say the surveys ring very true.

That's not to say business isn't being overly gloomy. I think employers and other business leaders understand the economy is still in good shape.

It's just that, especially for small and medium business, proposed employment law change is such a focus that it is colouring everything else.

This will come to a head in the next couple of months.

Business will have to learn to live with what will be. If the sky doesn't fall in and the global economy doesn't collapse these surveys may start to pick up.

But the Government is on hiding to nothing with this one. They should stop obsessing about it. Own goal - one nil down.

Acting Prime Minister Winston Peters has launched the strongest counter attack against the business gloom narrative.

If things are so bad, he argues, why is the New Zealand sharemarket at record highs and outperforming the rest of the world.

There are at least two objections to this claim but neither stops it being a great political tactic.

The New Zealand sharemarket is not a good reflection of our economy.

It doesn't have nearly enough exposure to agriculture and most of our domestic economic activity is driven by unlisted, small and medium sized business (the ones who are grumpy about employment law).

Also the sharemarket has been on a roll for five years. If the new Government doesn't get the blame for lower GDP growth can it take credit for the performance of the NZX?

But Peters is a canny politician. The sharemarket retains a romantic hold the public imagination. It is binary and easier for the average punter to visualise than dry economic statistics.

And he his point has some substance. The market has bounced back in the past few months.

International investors have decided the new Government is not a significant risk to our economic prospects - and that's positive.

Goal! It's one all, with everything to play for.

The results of all these measure are going to become more relevant in the coming months.

Expect to see the pace of this game pick up as the Government pushes forward in the second half.