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Kiwibank economists say according to the bank's own transaction data, spending slumped 9% in the March quarter

Kiwibank economists say according to the bank's own transaction data, spending slumped 9% in the March quarter

As sugar rushes go, this one lasted a fair while - but all things come to an end.

And according to Kiwibank customer transaction data, consumer spending slumped about 9% in the March quarter.

Kiwibank economist Mary Jo Vergara says the fall in spending as tracked by the bank is the first time since the lockdown last year ended. Some people may have seen "the bottom of their lockdown savings".

"The resilience of household spending has surprised us, and has been a key driver of the Kiwi economy’s post-lockdown recovery," she says.

"The splurge in spending over the second half of last year lasted much longer than expected. But now we have seen a pullback. Kiwibank’s transactional data suggests that the 2020 spending sugar rush might be coming to an end.

"Domestic spend declined 9% in the March quarter, the first time since the first lockdown ended. The buffer of household savings built up over the initial lockdown may be eroding. And digging through the details, most high-level spend categories were on a downtrend. Annually, spending is still up 41.8%, albeit likely inflated due to a structural shift away from cash as a means of purchase."

Last year, Vergara says demand was especially strong for household contents and furnishings.

"But there appears to be a limit to the number of pools we can fit in the backyard, or how many times we need to repaint the house.

"After a year of renos and repairs, there’s nothing left on the to-do list. Demand for household-related spend fell 21% in the March quarter."

Instead, she says, overseas travel, to Australia at least, is now back on the cards.

"The decline in spend may suggest that some have begun filling up the jar once again, ready for when our door is creaked open." 

She notes that "drawbridges" on either side of the Tasman have been firmly upright for over a year.

"Naturally, there’s a lot of pent-up demand for overseas travel waiting to be released. Like Kiwi, many Aussies will relish an opportunity for a break across the ditch, to visit friends and family not seen since before Covid." 

She says while the April 19 start of the trans-Tasman  travel bubble comes too late for the tourist summer season, it would provide some of our key tourist hotspots such as Queenstown, with hope as we head towards the ski season.

"And by country Australia is our largest tourist market by volume and total spend. In 2019, Aussies made up 40% of international visitors, with spend of $2.7 billion."

She expects some Kiwis will leave when the bubble is formed, especially if it is expanded to include the Pacific Islands.

"But for the Kiwi economy, the travel bubble will be a net benefit."


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Yikes - how do we keep the spending party going!?! Helicopter money? Negative interest rates? Jail terms for anyone caught saving money? Or a combination of all of these?


Every dollar earned goes into housing and bare basics at your local pak n save so there is not much left to go around the wider economy.


I think it may all end with some sort of negative supply shock.

Remember that a 3.5% growth rate will require about as much energy and resources over the next 20 years as what has been used from the onset of the industrial revolution.

Our high priests of economics believing in "forever growth" will keep on printing, but the nasty physical reality of the situation will ensure it doesn't.


I bought a takeaway pizza last night, that’s my two cents worth of discretionary spend.

You got a takeaway pizza for 2 cents? Where?

In the jumbo bin out the back...Yummy.


$1,500 cash for being completely COVID-19 vaccinated, instead of just more QE for property investors. This at least would flow into the economy, and may help increase vaccination uptake.

Tweak the F.I.RE economy, favouring the vested interest? - look what will happens next...when every resources .. drain into... that black hole.
Every sane mind teachers, healthcare professionals, engineers, police, dentist, pharmacist etc. etc - all bought one way ticket to OZ, avoiding the land of long dark dump.

Helicopter money please. Won't go on my mortgage. Will go on solid GDP stuff like fences, pets, firearms. :)

Digital currency

Gap appears when goosing finished.
Same with all QE and int rate cut induced increases in spending.

Now for the hangover.
This part of cycle seems to follow 9 months after roughly, the boost induction.
China notably slowing too.
So USA will do its damnedest to follow pattern, so their drop off we can expect next January approx.
Japan also looking peeky and EU so short on vaccination boost that it will not recover tl mid 2022 at earliest
So, what will we all do when the inflation arrives? ignore it to eroded debt


Every credit fuelled 'boom' is followed by an epic bust. Debt sucks future income into the 'now' where it is spent - on houses or cars or holidays or whatever. The future income is therefore already committed to repaying the debt and the interest. This is how a tsunami of credit makes a wasteland of the future.


Is the piper finally going to be paid?

Loans are again being repaid. Specuvestor's now have to increasingly pay some tax over the next three years. Interest rates guidance is trending up overseas. DTi and interest only being reviewed by the RBNZ, and one notes that Orr has previously requested DTi as a tool. The usual suspects are all complaining.

What could go wrong....popcorn.

Can't see Orr / Robertson deepening what looks very much like a double dip recession with more measures that are going to put brakes on the economy. They have enough political capital from being the party that engaged with the housing crisis and acted (the jury is out on if it was enough) to sit on their hands while all of these influences on our economy crash into each other and precipitates out in an overall effect.

Speaking of things coming to an end....
Did I just get a hint from the Aussie media that a Covid case is on the loose here again?
Look like an unusual 1.00pm Update scheduled as well.

Why on earth isn't the Govt looking seriously at the pre-flight testing certificates of those coming into the country? It is becoming clear that these are being sold on the black market.

They have looked at them and don't have any reason to believe they are fraudulent. They believe people have simply been picking up COVID in transit, particularly as they travel through India on connecting flights before getting on their flight to NZ. India is in the midst of a huge surge in cases just now.

Surely, time to ban all incoming travellers from India.
And ban all flights coming through the Middle East. And any travellers via Dubai Delhi Mumbai etc should be banned.

And stop all incoming Emirates flights arrivals. Pronto.
The hotel quarantine can only cope with so much.
This is very apparent. And highly urgent.

Everyone needs to watch The Truman Show if they haven't seen it. The RBNZ has bern busy queueing up consumer spending with the wealth effect. No point having the houses with exorbitant price tags if everyone's buying instant noodles. Time to splash on some new artwork, furniture, artisan foodstuffs, ski holiday. Put it on the tab.

The Truman Show is a good movie but what has it got to do with the rest of your post ?

Everything. The Truman Show is based around the idea that behavior can be controlled through nudge theory when in reality much is just smoke and mirrors. This is what the central banks are trying to achieve with mon pol and the tools at their disposal.

that pretty sums up NZ today....

go and have a look at the directors of NZME on the companies office website and ask yourself why it has three current or ex-bank board members...

have a look at the shareholdings....citicorp, jp morgan, hsbc...nominees so no one really knows who controls what...just lots of coincidences

MBIE were looking into nominee shareholdings and the trouble they could cause....what happened to this report?...shredded before the light of day I guess.

aren't we just being swindled as a country right in front of our eyes....the biggest con ever

And the new taxes will suck more disposable cash out, but governments know best how to spend lol

Young people have no money to spend, it's all going to landlords

And then to banks and now to government.

There are plenty of young landlords and old renters...


..and old landlords. The woman next door has 48 rentals which she proudly tells me on a monthly basis. What the hell.

I think you need to take the 48 rentals with a pinch of salt mate. I have never met as many bullshit artists as there are in New Zealand anywhere else in the world.


Is she single? Does she need a toy boy. Let me know. Could be my only ticket to home ownership.

LOL - how is "41.8% increase annually" a bad thing?

You may have noticed that March last year was... somewhat unusual.

Not really - this is the march QUARTER this is talking about. last year we only entered lockdown at the very end of March, in the last week of a 13 week quarter. March 2020 GDP was only down 1.6% vs march Quarter 2019

I'm surprised that spending is regressing to trend, house prices are still booming which gives people more overhead to borrow and the tax hangover has yet to set in.

How is it "regressing to trend"? the march quarter was 42% above the year ago march quarter.

If we keep borrowing at the current rate we will end up a complete basket case. This government knows no boundaries. I want one of those money trees please.