Here's our summary of key economic events overnight that affect New Zealand, with news the consequences of US policy changes are now starting to show up in the data.
The big overnight news is the Q1-2025 US GDP report. The American economy shrank at an annualised rate of -0.3% in the period, the first retreat since Q1-2022. This was a sharp reversal from +2.4% growth in the previous quarter and well below market expectations of +0.3% growth. A surge in imports was one key factor as businesses rushed to stockpile goods in anticipation of higher costs from the tariff announcements. But that didn't include consumers because their spending growth cooled to 1.8%, the slowest pace since Q2-2023. Federal government spending fell -5.1%, the steepest drop since Q1-2022.
That 'cooled' consumer spending reversed in March with a tariff-stocking-up rise for them too (especially for cars) ahead of the April cost increases. PCE inflation cooled a little, but not yet back to mid-2024 levels. Personal disposable income rose less than spending in March.
Financial markets reacted negatively to the larger than expected GDP shifts.
This weekend we get the April non-farm payrolls report and currently markets expect a smallish rise of +130,000. But that may be an over-estimate. The ADP survey of private business only added +62,000 workers to their payrolls in April, less than half of the downwardly revised 147,000 payrolls in March and well below market expectations of +115,000.
April data is weaker than for March, so prospects for Q2-2025 economic activity do not look flash for the giant US economy. US mortgage applications sank again last week, and for a third straight week. A pullback in new orders and production levels in April saw the Chicago PMI contract for its 17th consecutive month.
But US pending home sales jumped in March from February, ahead of tariffs which are expected to make new home purchases more expensive. But they are -0.6% lower than year-ago levels which itself was a weak base.
And still in the US, it is becoming clearer who will be paying the tariffs. Retail giant Walmart has raised the white flag, telling Chinese suppliers to resume shipments suggesting to them it will 'absorb' the new border costs. Of course they will be passed on to consumers.
Across the Pacific, we are looking ahead to the Bank of Japan rate decision later today, although the landscape has changed there and they are unlikely to raise their +0.5% policy rate now.
Japan's industrial production was weakish in March, coming in lower than expected from the prior month to be little-changed from March a year ago. At the same time they reported retail sales +3.1% ahead of the same month a year ago which was lower than expected, also with current weakness from February.
Nearby, Korea said their industrial production came in better than expected in March although not as strong as for February. Korean March retail sales however gave back a small bit of the outsized rise in February.
In China, their May Day holiday starts today and runs to May 5, inclusive. (They were required to work on April 27 (Sunday) to give them five consecutive "days of rest". They may not be resting; travel bookings for domestic trips are up through the roof this year. (Don't forget, in China, the standard working week is 8 hours per day, 40 hours per week, which is a five-day work week (Monday-Friday). However, it's important to note that the 996 work culture, where employees work from 9am to 9pm, six days a week, is a common reality, especially in their tech industry.)
Once again the official factory PMI for China came in with a small contraction (a definite slowing), while the private Caixin version came in with a small expansion, although a slight slowing. Separately, the official services PMI came in with a slightly better expansion. In all cases, new order levels retreated.
In Europe, the German economy expanded slightly in Q1-2025 from Q4-2024. Inflation was steady in April at 2.2%, and retail sales were up +2.2% on a volume basis from March year-ago levels, but little change from February.
That all helped the overall EU GDP to expand +1.4% in Q1-2025 from a year ago, up +0.4% from Q4-2024. It is rare that the EU outperforms the US, and this isn't so much because the EU is rising, more that the US is falling.
Whichever way you sliced it, Australia's inflation came in at 2.4% in March from a year ago. That was true for the quarterly CPI, and the monthly inflation indicator. Both were little-changed from the respective prior releases. There's now talk of a post-election rate cut from the current 4.10% cash rate target.
The pre-tariff shoring up saw air cargo demand spike in March, led by activity in Asia/Pacific, and the US. Come April and May, this spike is expected to reverse quite sharply. Passenger air travel is flattening right out, especially in North America. But it is being held up by strong China and India domestic demand, and still-good Asia/Pacific international demand.
The UST 10yr yield is now at 4.17%, unchanged bp from this time yesterday. The key 2-10 yield curve is up at +54 bps. Their 1-5 curve is still inverted by -13 bps. And their 3 mth-10yr curve is still inverted -14 bps. The Australian 10 year bond yield starts today at 4.15% and down -5 bps from yesterday. The China 10 year bond rate is now at 1.63% and down -1 bp. The NZ Government 10 year bond rate is down -4 bps at 4.44%.
Wall Street is down -0.7% in Wednesday trade on the S&P500. Overnight, European markets were all up about +0.4%. Yesterday Tokyo rose +0.6% in Wednesday trade. Hong Kong rose +0.5% while Shanghai slipped again, down -0.2%. Singapore rose +0.7%. The ASX200 ended its Wednesday up +0.7% but the NZX50 ended down a full -1.0%.
The price of gold will start today at US$3309/oz, and down -US$10 from yesterday.
Oil prices are down more than -US$2 at just under US$58.50/bbl in the US and the international Brent price is down more than -US$3, now just over US$61/bbl. These are four year lows, down to level last seen in April 2021.
The Kiwi dollar is now at 59.4 USc, unchanged from yesterday at this time. Against the Aussie we are down -20 bps at 92.8 AUc. Against the euro we are little-changed at 52.3 euro cents. That all means our TWI-5 starts today just on 67.6 and essentially unchanged.
The bitcoin price starts today down -1.3% from yesterday at US$94,182. Volatility over the past 24 hours has been modest at +/- 1.2%.
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59 Comments
America has not been able to pay its way for some time.
Like us, it offshored production, flipped houses to each other associating ever-bigger numbers with said houses, and used that as 'collateral' to buy offshore-produced stuff. Of course, it couldn't last - and had run its course by 2008.
Stupidly (if understandably) politicians and financiers, from Obama on, have attempted to extend and pretend. That era has come to an end - but blaming the symptom (Trump this, Trump that) is invalid thinking.
The question is: What comes next? Because what was happening wasn't 'normal', it was a one-off outlier. Normal - think long term sustainable - requires a great deal less material and energy throughput.
The question is: What comes next?
It's already been happening for many of us since 2008; wealth will continue to proliferate and what the average person gets for a days worth of time will reduce.
Millennials will still pine for the boomer lifestyle for a bit, but it seems like much of Gen Z have already waved the white flag.
PDK your blinkers are too tight. Nixon dumping the gold standard was likely the first significant start of the problem. The US, and the world, has been in denial ever since. Indeed one may be able to argue that Milton Friedman started it with his economic theory of the "free market" that the US imposed on the world. History now tells us that that theory is significantly flawed in multiple ways, not least because it drove a level of growth (and a mindset towards growth) that the environment could never accommodate. The mindset is still so embedded that politicians the world over still cling to it. This is in part also driven by political tensions which is pushing some to try to dominate, and impose their ideology and/or authority across the world.
True Trump is a symptom, and worse he is clearly stupider than many, but the real issue is that political establishments, starting in the US are still refusing to ask "Why Trump?" and on the rare occasion that they get close, the response is so superficial and inane as to be nonsense as responders seek to sustain the current system. The level of denial as people seek to entrench their power and privilege is going to destroy this current iteration of the species.
As we can see from Canada though, Trump is a pretty poor advertisement for right wing fundy movements thatve gained in popularity in recent years.
So the shining beacon of his term will be the motivation for stronger candidates and movements on the other end of the spectrum.
Yes the polarisation of politicians is a virtual certainty. I don't understand why well grounded common sense people with the ability to provide answers to their critics, who sit in the middle can't get traction.
I used to like Winnie a lot, but these days I feel he is getting too irascible, and that is sad. He used to offer sensible answers that made other politicians look stupid, but now he is looking too old, too past it and too impatient. It is clear he understands how the system works and that the media are required to challenge him, but his lack of sensible answers, before the questions get stupid, is a worry.
It looks like we are going to be subjected to wide swings towards populist extremes, which will only really do more harm, as Trump is demonstrating.
I don't understand why well grounded common sense people with the ability to provide answers to their critics, who sit in the middle can't get traction.
Unfortunately we're now engendered towards sensationalists on either end of the spectrum. Sensible moderates don't make for good press, and realistically are going to need to be pitching plans that need some time to bare fruit. The people want change, yesterday.
And politicians never come out and tell a simple truth plainly that anyone can understand. Fear of exposure to critics who overthink the issues i guess, and that was where Winnie really excelled. Add that to expectations and entitlement as the hole we are in just gets deeper and bigger.
Part of the problem is currently we have multiple generations with multiple fortunes, and multiple political requirements. So the truth is going to be unpalatable depending on where many of us sit.
Parts of the truth are always unpalatable, but full and clear explanations, including discussing of all possible solutions should at least convince people of the necessity and help to decide the best solution that delivers the best benefits (or at least, does the least harm). Treat people like they're intelligent. There's always a few who will prove they aren't, but most will respond positively.
Just as one instance, part of resolving housing affordability will require destroying hundreds of thousands of people's equity. Turkeys don't usually vote for Christmas.
Likewise share values and retirement schemes need destroying to return value to today's workers.
Very hard sell politically.
We also have the media to consider and their role in the sensationalism of politics sensationalism and polarisation sells, and they are following the money now more than ever, as opposed to the truth, and balanced reporting. Unless this is addressed, everyone will continue getting different slants on the same news an struggle to have balanced analysis for themselves. Critical thinkin is on the decline, and without this ability bein prevalent in the population, we will continue to see a degradation of politics IMO.
Last night I commented that the comments thread often outdoes the article content.
Just scanned down that one, and thought - there's an example
:)
At least WP was a qualified and practising lawyer when he entered parliament. Far too many are now straight out of varsity, if even that, and into politics as a career. That has created firstly a priority of what’s in it for me and secondly destroy the opposition regardless of any merit in their policy or argument. In turn parliament has become fractious and policy making overly subjective rather than the best direction for the nation.Of course this is not unique to New Zealand.
He (Winston Peters) used to offer sensible answers
Not really. He's always been a populist in the sense that he targets a specific voter base - initially it was seniors - now it's seniors + the highly prejudice MAGA-types.
To my mind it is because of Winston Peters that no government dare try and address the folly of NZ's universal superannuation.
"The question is: What comes next?"
I suspect we wont have too long to wait to find out
The illusion of Western exceptionalism is something that's a decades or centuries long process to unwind.
People are conflating that with the end of the world.
Or maybe not, but we will find out for sure.
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
The dialogue above is from Ernest Hemingway’s 1926 novel, The Sun Also Rises.
An oldie but a goodie.
There's just so many tales of imminent woe, and many of them make good cases, but reality seems to unfold differently.
Flipping houses in the US is nowhere near as economically significant as it is here.
Although of course it was the first place where the 'reality' TV genre of flipping houses took off.
Alternate view on how the wealth divide has become what it is
https://youtu.be/HchNA3a9L5E?si=fEXJy9UaN4QP1yj8
TLDR; it wasn't the move away from the gold standard in the 70s, but Neoliberalism in the 80s
TLDR Introduction of derivatives specifically?
Plus changes to taxation, deregulation, opening up to global competition, etc. Basically a multi-pronged move against the value of first world labour.
The gold standard perspective has a large amount of self interest behind it. From the day you're born, someone else already has all the gold, and prying it from them, fairly difficult. It's just in gold holders interests for as many people as possible to also be chasing it, supporting or increasing it's value.
Sounds just like property, NZ banking is land backed.
Even worse. Few people really need gold, but most everyone needs somewhere to live.
At todays house prices its modern day enslavement.
Indentured servitude maybe.
But large civilisations have usually been about ensnaring most of the populace. Just that for about 40-50 years, it was able to provide a fairly good standard of living for a few hundred million lucky ones in developed nations.
Or even earlier...by some hundreds of years...and all facilitated by (a one off spike of) energy.
Hundreds of years ago, most of us were serfs with almost zero chance of any sort of class mobility.
Its actually a lot more then just energy as oil has enabled plastic manufacturing.
Pure energy will not produce fertiliser or plastics, although with enough pure energy you may well be able to make fertiliser with a lossey process, we will see.
You don't need oil to make plastics or fertiliser. Nuclear ammonia, diesel, ethene etc. is there if traditional hydrocarbons ever run out.
"The cost of the end-products from these vessels was competitive with the long-term average costs for their fossil fuel-based counterparts—even without carbon-taxes or fees that would increase their competitiveness even further. Ammonia could be produced below $250/ton ($290 for the multi-product platform), and jet fuel at below $85/barrel."
https://thebreakthrough.org/journal/no-18-fall-2022/the-future-of-nucle…
"Valar’s underlying technology uses helium gas to reach temperatures up to 900°C — triple that of conventional nuclear reactors. This means Valar could also produce hydrogen efficiently and combine it with captured CO2 to create low-carbon synthetic fuels for vehicles and infrastructure.
“If you can get a nuclear reactor that hot, you can produce hydrogen very cheaply, and you unlock all sorts of things. One of those things being synthetic fuels."
https://techcrunch.com/2025/02/20/valar-atomics-comes-out-of-stealth-wi…
"Results, located in the UK, show that the tandem process could be economically competitive (with the lowest production cost of $ 1.34 per kg of ethylene), while the methanol-to-olefin process with methanol obtained from syngas (produced through carbon dioxide-water co-electrolysis) has the best advantage for carbon dioxide emissions (with the lowest impact of −3.08 kg of CO2eq per kg of ethylene). Moreover, the most preferred energy source for the electricity supply is the nuclear one with a small-scale plant because, economic and greenhouse gas emission advantages are provided while, worse conditions are obtained when solar energy is used."
https://www.sciencedirect.com/science/article/abs/pii/S2352550923002452
You don't need oil to make plastics or fertiliser.
You can make concrete from hemp.
But cement is cheaper, easier, has better properties, and is ubiquitous.
Same goes for much of our petrochemical products.
Hemp strawman? Are you really suggesting nuclear power derived ethene is some has different properties to traditional hydrogen derived ethene? The building blocks of plastics are as basic as it gets. FWIW if you want to decarbonise cement nuclear is a great way to go.
Hemp just as an example. I have to deal almost daily with renewable/greener construction materials. They're almost universally inferior than the status quo.
Most of the processes and materials we use are so, because they're the cheapest, best, most readily available way to do so. Nuclear derived alternatives are more costly, and/or simply aren't available at the scale to supplant those derived from fossil fuels.
And can only provide base load electricity....they need balancing. Nor do they provide the multitude of other products derived from oil/gas.
How do you build (and maintain) the reactors....oh thats right, with fossil fuels. How long do you think we may have in both terms of time and raw materials to discover, problem solve and create these technologies at scale?
One would expect (or more likely hope) before the existing systems break down.
Oooops.
I get the feeling you'll get a kick out of this
A kick ?...no, but it it aint far from the reality, and they dont even mention the copper.
The 'suddenly' aint far away and the ineptitude on display from our so called leaders is down to the fact they have no idea what to do because frankly there are no (palatable) solutions.....meanwhile everyone is positioning to seize what they can while they can.
we're overshot and you cant turn back time.
Billy Bob and a young actress who looks a lot like a younger Angelina Jolie!
Multiple messages though; walk away from a rattle snake before it bites you, or you have to kill it to stop it biting you. If you do kill it then take the rattles! Don't walk too far from where you parked or the wild life might get you before you can get back to your vehicle. Oh yes, it's getting too hard to kill the demand for fossil fuels to be able to find an alternative before you run out of oil.
and that is the real problem isn't it? No not too many rattlesnakes in the grass, just that fossil fuels are too ingrained to everything we do, and finding alternatives isn't easy. What's not mentioned is that demand is driven by far too many people with too high expectations.
But yes it's is funny.
Landman. It's a good show.
I provided a handy link for you above to answer those questions. Or you could even look to France that belted out 48 reactors in 15 years.
"But it is a powerful fact that the manufacturing capacity, along with most of the necessary supply chains, already exists within the shipyard industry."
I guess you would use traditional hydrocarbons to build/maintain the plants because they never been more plentiful, given the record production oil, gas and coal production last year. You would only use nuclear derived synthetic hydrocarbons if you wanted to use CO2 out of seawater or the air - and who would want to do that if there was plentiful traditional hydrocarbons around? You would need some sort of CO2 panic and want to remove a lot of CO2 from the atmosphere to go down that route.
Given we are producing record amounts of traditional hydrocarbons one would suggest we have plenty of time, so you can stop fretting and relax. Especially given current birth rates - traditional hydrocarbons best days may be over.
Where did france build these 48 reactors....on the moon? There have been 27 nuclear reactors commissioned globally since 2010, mainly in asia. The last reactor built in France took 16 years ...they currently have one under construction and several closed for repair or decommission.
He may have been wrong about 48 plants being built in 15 years. According to this, it's an underestimate:
"France's decision to launch a large nuclear program dates back to 1973 and the events in the Middle East that they refer to as the "oil shock." The quadrupling of the price of oil by OPEC nations was indeed a shock for France because at that time most of its electricity came from oil burning plants. France had and still has very few natural energy resources. It has no oil, no gas and her coal resources are very poor and virtually exhausted.
French policy makers saw only one way for France to achieve energy independence: nuclear energy, a source of energy so compact that a few pounds of fissionable uranium is all the fuel needed to run a big city for a year. Plans were drawn up to introduce the most comprehensive national nuclear energy program in history. Over the next 15 years France installed 56 nuclear reactors, satisfying its power needs and even exporting electricity to other European countries."
https://www.pbs.org/wgbh/pages/frontline/shows/reaction/readings/french…
Apparently so...however
"The reason that the Messmer Plan was enacted without public or parliamentary debate was that there was no tradition to do that with highly-technological and strategically-important decisions in the governments of France and the parliament did not have a scientific commission with sufficient technical means to handle such scientific and strategic decisions, just like the public does not have such means. France does not have any procedure of public inquiries to allow the assessment of major technological programmes.[19] The plan envisaged the construction of around 80 nuclear plants by 1985 and a total of 170 plants by 2000.[17] Work on the first three plants, at Tricastin, Gravelines, and Dampierre, started the same year[6] and France installed 56 reactors over the next 15 years.[20]
However by the mid 1980s it became clear that the Messmer plan had been overambitious. Nuclear power plants achieve their optimum economic value when run flat out, and the projected demand had not materialized. By 1988 France's nuclear power plants had a capacity factor of only around 60%, whereas other countries that had not invested in nuclear power so heavily were nearer 80–90%.[6] Still, the goal of replacing imported fossil fuels in electricity generation was mostly met (France noawadays uses only minuscule amounts of oil to produce electricity and its last two coal power plants Cordemais Power Station and Saint-Avold are to be shut down when the 1600 MW net electric EPR at Flamanville Nuclear Power Plant comes online[21][22])."
and
By end of April 2022 it was reported that 28 of France's 56 nuclear reactors were offline.[52][53] French nuclear energy production has fallen to the lowest level since 1993 and it is expected to fall short by at least 25% compared to usual production levels in the winter of 2022/2023.[54]
So france built these reactors at a time when there was no regulatory restraint, public opposition or resource constraint....and they are now all approaching the end of their useful life and need to be decommissioned and replaced...what chance thats going to occur whithin the needed timeframe let alone expanded?
You really should read links before commenting. France built them in the late 70s after the 70s oil shock. They now export electricity €5 billion a year. You should try reading about it?
Unable to comment on the median house prices article.....this is becoming more common on this site.
For another $20 a month, we can upgrade you to the excelsior package. Faster response times, less bugs.
There's a good episode on the new season of Black Mirror which touches on the pitfalls of subscription models.
“You’re giving me commercial tourettes!”
The neurological hacking did seem intriguing though
total shitification.... not really worth commenting on cotalitys made up numbers...
since we realised these values are made up valuations vs actual sales, no one takes the report seriously.
You seem pretty serious about it... like it's ruined your day serious...
Introducing a topic. Has any one had experience with Law Society Complaints?
For those who do not know, there is no individual body handling these complaints, it is done by lawyers themselves via the Law Society.
I am now into month 6 without a result, the result itself impacting on a matter that has been held up by a Law firm for other three years.
This self regulating approach seems inadequate or it needs more resources to be effective.
Lawyers deal with these matters by stalling, hoping you will give up and go away.
Law is pay to win.
Advice from experience; unless it's custody of your kids or something, forget about it and move on.
In private conversation a lawyer can savage, ridicule and denigrate another lawyer, call them corrupt, incompetent and worse. But collectively, as a body, publicly every lawyer will say there is no such bad lawyer in practice.
Made only one complaint in my life - about over-charging - and won it pretty quickly. Then again, it was a ridiculous over-charge at the time.
I bet it it pales in comparison to what I'm dealing with re charging (which is only a small part) . If I have the energy when it's over I may write an article - an issue that is pretty relevant at the moment and could happen to anyone - it's not unique. But I can't elaborate.
Query. Seems we now have a policy of stopping commenting on all property related articles. If not why are they always listed with the comment options closed for posts?
David alluded yesterday that there's something broken with the system, it's not just property articles.
Although the property articles comments write themselves anyway, no big loss.
Maybe Interest.co are too far behind on the rental...
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