Convincing Kiwis it's safe to spend money won't be easy. Photo / Getty Images
A consumer survey that asked New Zealanders what they would be likely to do with any travel refunds offered a stark warning to the nation's optimism about a speedy recovery.
Around a third of the panel who answered that question said they planned to "just save the money", while a further 14 per cent said they would use it pay off some of their personal debt.
The underlying point here is that Kiwis simply aren't as willing to spend money as they previously were.
Instead, those funds – previously considered disposable – are now being redirected toward safety nets and staying afloat.
That does not bode well for business owners who have been waiting for shoppers to open their wallets after the extended period of trade restrictions. And it offers a reminder that one of the biggest impediments to an economic recovery is convincing consumers it's safe to shop again.
Robert Harvey, the chief executive at Dentsu Aegis Network, has been tracking trends in consumer perceptions all the way through New Zealand's response to Covid-19 and says there's been an important shift in the latest research to emerge from his team.
He says that as the nation moved from level 4 through to level 2, the main concern for consumers shifted from the health-related aspect to surviving a recession.
"I think everyone accepts as a nation that we've done a fantastic job in navigating the health crisis, but we've seen a really quick shift from a health crisis conversation to an economic crisis conversation," he says.
"As we moved from level 3 to level 2, essentially the space of a week, we saw a 26 per cent increase in the number of people who said they were more concerned about the economy than the virus.
"What people are worried about now is job security, how they look after their family and what this means for the economy and local businesses. That anxiety is really significant at the moment."
That shift is having a major impact on the willingness of New Zealanders to spend money.
"In our research, 70 per cent of respondents said they would be reviewing their previous spending habits. And we're seeing that number increase week after week," Harvey says.
That reluctance to spend is likely to have a direct impact on the ability of businesses to recover in the coming months.
ANZ's latest consumer confidence research, released on 29 May, indicated while there had been an increase in consumer confidence it was still well below the figures posted a year earlier.
The research from New Zealand's biggest bank showed the willingness among Kiwis to buy major household items was currently sitting at levels last seen during the previous recession – which, in turn, indicates retailers will continue to struggle well beyond the Covid-19 disruptions.
"There is considerable optimism that things will be better a year from now, but that's currently still a pretty low bar, and whether this will translate into a willingness to spend today is questionable," the bank said in its report on the research.
"We see elevated unemployment affecting household sentiment and spending for a long time yet."
So far, the wage subsidy has protected some New Zealanders from losing their jobs but this will eventually come to an end.
The official unemployment rate sat at 4.2 per cent at the beginning of May, but economists anticipate that it could exceed 10 per cent by September.
The inevitable anxiety about job security will be felt by workers across the country and can ultimately have an impact on their willingness to spend, says Westpac senior economist Satish Ranchhod.
"The big thing will be keeping Kiwis in their jobs," he says, explaining that if people don't feel secure in their financial position, then they won't be as likely to spend as they once were.
Ranchhod anticipates that industries like hospitality will be hit particularly hard by this drop in consumer confidence.
There's also an important emotional aspect to consumer confidence, which is driven by the way consumers feel in a certain moment.
Asked whether the constant stream of media stories about job losses could also have an impact on consumer sentiment, Ranchhod said that it could serve to reinforce concerns some might have about the economy.
"Fortunately, we are now also starting to see a few more positive stories, so this might also help to lift sentiment," he said.
Whether that does enough to restore confidence is yet to be seen, but those figures could serve as strong indicator not only of how much pain New Zealand businesses are in for – but also how long that pain might last.