The big bank economists are mulling what the flagging business confidence and drooping inflation expectations mean for the economy, with one economist even questioning whether the economy is heading for 'stall speed'

It's the job of bank economists to be 'optimistic' ( optimism being in the eye of the beholder, of course) and as a result, all of the above calls by the collective are still overly 'optimistic' no matter how cautious they appear. True optimism; optimism that the domestic economy is about to rebalance itself away from speculative hope towards productive endeavour is not far away. But the bank economists won't either write or like that, will they!
(NB: Perhaps the Aussies have beaten us to it again? "Brace for Aussie GDP wipe out")

The book by Akerlof and Shiller (Animal Spirits: How Human Psychology Drives the Economy) sums up well what we're seeing. But its not new.

Is it agreeable that our business owners are actually now the doom and gloom merchants within the new zealand economy - and not the left leaning hippies that have been labelled the DGM's for the last few years on this site?

'Humming construction sector' the past few confidence surveys wouldn't support that.
Don't be fooled by all the cranes on the skyline. Those projects kicked off years ago.
Almost all of these bank economists have no idea.

We move in unknown territory. All that economists didn't know, what negative interest rates were 5 years ago. Just like water running up a hill. They better sack the economist and pay the shareholders a bit more. Fasten your seatbelt and hold on. It's going to be a bumpy ride.

Falling expectations of inflation pointing to a need for further stimulus from the Reserve Bank?

Repeating the need for further "stimulus" wont resolve the fact that cutting interest rates and engaging in QE type assets swaps with banks doesn't make the latter's shareholders authorise their employess to extend copious credit beyond those with pristine credit scores and unencumbered collateral. In fact:

The reason the bond market isn’t pricing in a resulting burst of inflation is because the banks buying the balance sheet tools in the bond market (and maybe gold, too) know from experience and practice central banks are incapable of creating inflation. That much has been fully established by the last twelve years. The fact that central bankers don’t know it yet further strengthens the case; they’ll try and simply repeat the same failures even if they go full BoJ QQE shock and awe. Link

Is this better than being overly optimistic and selling products with higher risks built in, as happened last time, triggering the GFC ?
Anyways, now that we have all agreed that recession/deflation is going to happen in the near future and monetary policy is not working, I say, time for the helicopter drop of money directly to consumers. Let the recovery start...

D-E-F-L-A-T-I-O-N .........I have been banging on about his for almost 2 years and I dont know when Mr Orr intends to state this in clear unequivocal terms , so everyone of us is clear as to the problem .

Its like the alcoholic who will not face reality .

We are in a delfationary cycle , and Ben Bernanke ( remember him ?) and the Federal Reserve are to blame for sowing the seeds of this poisonous plant .

QE money printing and zero interest rates was never going to end well .

These policies damaged one of the four factors of production , and things are out of balance

During the GFC Banks should have been allowed to fail , the debts of greedy banks everywhere from Ireland to Greece and Iceland should never have been passed on to the populace .

Now we have gone through over a decade of one of four the key factors of production having been reduced in value to almost zero , and if you need any evidence of what happens when you destroy the value of one of them look at this :-

4 FACTORS OF PRODUCTION

Damage or destroy the intrinsic value of any one of them and it will not end well .

LAND :- Ask Zimbabwe what happened when the value of farmland was reduced to zero by confiscation , it leads to horrors they are still grappling with 20 years on

ENTREPRENUERSHIP :- Ask Russia or Cuba or North Korea what happened when entreprenuership was destroyed .

CAPITAL : - Ask Japan what happened when the value of capital was reduced to zero through zero interest rates .

LABOUR :- Ask anyone in an unequal society what happens when you fail recognize the value of labour and fail to pay workers a fair wage It leads to crime , dysfunction and social disorder, among other ills .

We are dealing with the consequences of this QE - easing - printing - zero interest rate folly , and its time to call it out .

The sag in confidence is unremarkable - it would have been truly heroic and Remarkable if all was said to be Sweetness and Light. Consider a small selection of headwinds:

• Urban environmental discontents projected outwards onto agriculture, ostensibly because of 'pollution' and other externalities but revealing much dissonance: urbanites 'pollute' their environment but there are more of them.... Ag is a large chunk of exports, Fonterra a large chunk of that, and while much of F's quandary is self-inflicted, the Ag sector as a whole is not gonna stick its head above the parapet and Invest, unless it's for its own survival.
• Oil and gas goneburger: and the Gubmint has shown that, with no warning and less analysis, it could happen to another sector overnight. Long-haul air travel is a likely target: another major export earner. Because reasons.
• Minimum and Living Wage movements: both directly increase input costs for the lower end of SME's, who are least well placed to absorb them nor to increase prices to compensate. No mention of a Living Wage for the hapless proprietors, they're Kulaks and deserve everything they get....

Unlike an exchange rate movement or a tariff, investment cannot be jawboned into existence. It's pushing on a string. But it does work the other way, only too well: strings do work in tension, so Investment is easy to destroy, displace or mute......