Activity slumped in the services sector again last month, echoing a drop in the manufacturing sector and suggesting the anticipated pick-up in economic activity is struggling to get started

This has all the hallmarks of an overshoot. Further negative economic news later in the Spring spooks the RBNZ, the OCR drops to 2%, the $NZ drops to US50c, exports take off like a rocket, economic activity swings in to crazy positive territiory, house prices take off, another asset bubble forms, the $NZ goes up into the high 60s, the RBNZ raises the OCR to 6%, exports plummet, the housing bubble bursts, economic activity tanks - rinse and repeat.

I'm wondering at this point if the sluggish economic activity isn't also induced by fear, driven by the austerity measures of this government on one hand, and by the craziness happening in the US on the other

I'm starting to believe it's not a numbers' crisis as much as a vote of non confidence in the governing parties, which do their darnedest to show they only care about their mates' profits, disregarding the economy's health

After all, long term prosperity correlates strongest with confidence in the government and the country's stability. Both the NZ and the US governments are acting haphazardly and destabilizing the status quo

So I start to think the economy will pick up when our government starts showing some signs of competence, goodwill and stability, no matter what the number posted on the RBNZ wall is saying

- edit - the quote on the bottom of this page is now "Monetary policy is not a panacea. ~ Ben Bernanke". Quite serendipitous

I had a discussion with Chat GPT about the this re-occurring headline - above - predicting recovery in the NZ economy. And how the continuing economic contraction in key sectors is somehow a sign of recovery.

Me: 

Given that NZ economists have had to consistently downgrade their fore-casts for the passed two years what do you think they are missing from their models and thinking?

Chat GPT:

NZ economists have systematically overestimated private sector resilience and underestimated the drag from fiscal tightening. Their models are still too anchored in the idea that monetary policy is the main lever and that once inflation drops, recovery naturally follows.

An MMT perspective flips that:

• Recovery doesn’t come “for free” with lower inflation — it comes from sufficient net spending power in the economy.

• If the private sector wants to save and the government is cutting back, then weak demand is the logical outcome.

👉 So, the repeated downgrades are not just bad luck — they reflect a structural blind spot in mainstream NZ forecasting: not treating fiscal stance and sectoral balances as central drivers of growth.

Me: Given the above what is a more realist outcome for the NZ economy next year?

Chat GPT: 

✅ MMT-Informed “Realistic Outcome”

• GDP: 0–1% growth, with risk of minor contractions in quarters.

• Unemployment: ~4.5–5%, possibly sticky in services sectors.

• Inflation: easing gradually, ~3–4%.

• Private demand: weak, with continued desire to save/deleverage.

• Fiscal requirement: active stimulus needed to sustain recovery.

• Monetary policy: supportive but insufficient alone.

Bottom line: NZ next year is likely to see sluggish, uneven growth rather than a smooth rebound. The economy may feel like it’s limping forward, with slack in labor and capital persisting unless the government steps in decisively to support aggregate demand.

FFS: Can we have a left-wing government back in charge - at least they understand the role of fiscal policy in the economy.

The current government completely missing in action but I suspect this is not accidental. Higher unemployment and distressed assets are very necessary for those with access to large amounts of a capital and the need to satisfy a return.

Setting AI prompts up to write and publish 'things are on the up' / 'oops we're stuttering' stories on alternate days for the next 6 months.