Matt Nolan

People have decided to stop going to Aussie – go the collapsing labour market

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Fewer people are departing to Aussie this February than in Feb 08 (down 22%). The economics tea leaves never leave me wanting – maybe I need to incorporate them into my forecasting routine.

This is a drastic slowdown – and is consistent with the sharp increase in unemployment over in Aussie. Now I’m just waiting for someone to say:

1) Aussie departures near record high or,

2) John Key stems tide to Aussie.

Both will give me a little giggle 🙂

Update:  Go here, read the comments 😀

Matt Nolan

Articles, economic flows, and tax authorities

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The Interest Blog has linked to a couple of old Dominion Post articles from Infometrics economists:

One the provides a metaphor for the slowdown in economic activity.

And one that describes the possibility of centrally determined tax rates. (I have mentioned that one before).

Enjoy …

Matt Nolan

Why prefer spending to savings

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Prime Minister Key appears to believe that it is in the interest of the nation for us all to take our tax cuts and throw them around – either spending them or finding other people to spend them for us.  However, I don’t see why we have to rely on consumption now or giving to charity to do this.

Our credit market is working – if we give money to the bank they will lend it out to someone that will spend it.  The person that spends it will earn income in the future and pay the bank back, and the bank will pay us back.  Where is the issue here?  The focus really shouldn’t be on spending – it should be on production.

Now, if the credit market was broken in NZ there could be a different story.  Hell if unemployment was nose-bleedingly high you could make a case for it – but it is 4.6%.

Bernard Hickey at Interest Blog expresses similar sentiments here.

Matt Nolan

Why I’m sick of hearing about “productivity”

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There is nothing wrong with productivity, I love productivity. But why does this government have to bang on about it like it is an issue they actually have control over.

Increasing productivity implies that we can make more stuff for the same amount of labour and capital – now this is a completely good thing, we can be wealthier without any more work! However, surely when I put it this way alarm bells must start to ring!!!!

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Matt Nolan

Keep an eye on migration tomorrow

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My economics tea leaves are suggesting to me that there will be fewer than 4,747 departures to Australia in the February figures. If this is the case, the number of departures to Australia will be LOWER than in Feb 2008.

It is this sort of speculation that is giving me dreams suggesting that net migration will pick up quite quickly, very interesting.

The reason I think it is important to keep an eye on this is because I’m getting hacked off with news stories talking about the “huge outflow to Australia” when its growth has been drastically slowing since the end of 2008 😛

Update:  Realised today is Wednesday – not Thursday.  The numbers are out on Friday 😛

Matt Nolan

In defence of bank’s forecasts (sort of)

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Roger J Kerr at the interest blog has made a number of good points in this post.

I agree that long-term mortgage rates look a bit vulnerable – if I had a mortgage the 5 year rate at 6.49% would be pretty tempting.  Still, I’m no expert (I’m barely an amateur) at picking mortgage rates, so I wouldn’t do anything on this speculation.

Still, there is one thing I don’t agree with in this post – his determination to bag the retail banks.  Roger makes it sound like bank forecasters and the RBNZ have a massively different view.  However, both expect a sharp bounceback – the main difference is “timing”.  Fundamentally, retail banks expect it to be 6-12 months later than the RBNZ does.

This graph from ANZ illustrates the point well (found here under 12th March 2009):

anz-rbnz-forecasts