So that's not true?

Well, we looked at the seven elections, so obviously different, different periods, and also looking at, you know, consumer spending, investment, house sales, a whole bunch of things.

And but generally the evidence does suggest that while there are some slight differences, for example, the GFC and COVID, there was, uh, obviously quite a lot of difference there.

The general trend is that activity is actually stronger before elections rather than after.

So rather than delaying decisions, uh, firms and households just get on with it.

Okay.

Now, essentially, what's driving that is, again, cost shocks.

You know, oil prices are...

So that's not true?

Well, we looked at seven elections, so obviously different periods.

And also looking at consumer spending, investment, house sales, a whole bunch of things.

But generally, the evidence does suggest that while there are some slight differences, for example, the GFC and COVID, there was obviously quite a lot of difference there.

The general trend is that activity is actually stronger before elections rather than after.

So rather than delaying decisions, firms and households just get on with it.

What do you see by the end of the year?

Yeah, pretty nasty.

So that's not true?

Well, we looked at the seven elections, so obviously different, different periods, and also looking at, you know, consumer spending, investment, house sales, a whole bunch of things.

And but generally, the evidence does suggest that while there are some slight differences, for example, the GFC and COVID, there was, uh, obviously quite a lot of difference there.

The general trend is that activity is actually stronger before elections rather than after.

So rather than delaying decisions, uh, firms and households just get on with it.

Mm-hmm.

Now, essentially what's driving that is a- again, cost shocks.

You know, oil prices.

Okay, do you soak up, and this is the key to the headline I guess, are you soaking up, is the 20,000 just soaking up those who want it, or is it making a material difference, and if it isn't making a material difference, how long before it does?

Yeah, to some extent there is quite a lot of slack in the labour market.

The unemployment rate is 5.6%.

The encouraging thing with yesterday's data was it shows that the demand for labour is still there.

If it was not for the Middle East conflict, the economy would be absolutely booming and jobs growth would be much stronger.

But we'll take what we're given.

But this really suggests that the unemployment rate, the direction from here will be downwards.

Where's Auckland, by the way? I couldn't find Auckland's number at the engine room of the economy.

Okay, do you soak up, and this is the key to the headline I guess, are you soaking up, is the 20,000 just soaking up those who want it, or is it making a material difference, and if it isn't making a material difference, how long before it does?

Yeah, to some extent there is quite a lot of slack in the labour market.

You know, the unemployment rate's 5.6%.

The encouraging thing with yesterday's data was it shows that the demand for labour is still there.

If it was not for the Middle East conflict, the economy would be absolutely booming and jobs growth would be much stronger.

But we'll take what we're given.

But this really suggests that the unemployment rate, the direction from here will be downwards.

Where's Auckland, by the way? I couldn't find Auckland's number at the engine room of the economy.

I mean, is this 2020 hindsight all very well to look back now, but at the time it was hard to see, or should they have seen? A

bit of both, really.

Hindsight's always a great thing.

I suppose for them, you know, it was really the least regrets.

You know, what did we want to avoid? And it was a pronounced period of deflation, so they went the other way.

Unfortunately, the global economy and the New Zealand economy as well proved to be more resilient and adaptable than initially thought.

The amount of stimulus was put in place not only by the Reserve Bank but also the Treasury as well was absolutely massive.

Mark, what about the dual mandate? What is your takeaway from this report?

So over e- I mean, is this 2020 hindsight all very well to look back now, but at the time it was hard to see, or should they have seen it?

Uh, a bit of both really.

Uh, hindsight's always a great thing.

I, I suppose for them, you know, it was really the least regrets.

You know, what, what, what do we want to avoid? And it was a pronounced period of deflation, so they went the other way.

Um, unfortunately, um, the global economy and the New Zealand economy as well proved to be more resilient and adaptable than initially thought.

The amount of stimulus that was put in place, not only by the Reserve Bank but also the Treasury as well, was, um, was ex- absolutely, uh, massive.

Mark, w- what about the dual mandate? What is your takeaway from this report?

I mean, is this 2020 hindsight all very well to look back now, but at the time it was hard to see, or should they have seen it?

A bit of both, really.

Hindsight's always a great thing.

I suppose for them, you know, it was really the least regrets.

You know, what did we want to avoid? And it was a pronounced period of deflation, so they went the other way.

Unfortunately, the global economy and the New Zealand economy as well proved to be more resilient and adaptable than initially thought.

The amount of stimulus was put in place not only by the Reserve Bank but also the Treasury as well was absolutely massive.

Mark, what about the dual mandate? What is your takeaway from this report?

So you're, you're as far as I can work out, you're reasonably bullish at 0.3. Where do you get that from?

Yeah.

Basically the economy is extremely uneven, but in terms of the, the drivers really the good sector, so construction sector activity rose pretty strongly for the quarter.

Also export activity as well was very strong, and we had a strong, uh, quarter for the primary sector as well.

Is, is that the last piece of the puzzle if the job ads are up and jobs move, plus we've got growth, plus we've got exports, we're done and we're back to what you would loosely remember those days call normal?

normal?Yeah, I think that's certainly the case.

At the moment, what we're seeing is consumers are reasonably cautious.

Cost of li- living is, is a real challenge.

So you're, you're, as far as I can work out, you're reasonably bullish at 0.3. Where do you get that from?

Yeah.

Basically, the economy is extremely uneven, but in terms of the, the drivers, really the good sector, so construction sector activity rose pretty strongly for the quarter.

Also, export activity as well was very strong, and we had a strong, uh, quarter for the primary sector as well.

Is, is that the last piece of the puzzle? If the job ads are up and jobs move, plus we've got growth, plus we've got exports, we're done and we're back to what you would loosely remember those days call normal?

Yeah, I think that's certainly the case.

At the moment what we're seeing is consumers are reasonably cautious.

Cost of li- living is a real challenge.

So that's in nominal terms before we get back to where we were in 2021, right? What about in real terms? What about taking into account inflation?

Yeah, obviously it's going to be quite a bit longer than that.

I think the key thing to note, though, the 2021 peak was unsustainable.

Our analysis looks at three key influences.

One, interest rates.

They were at record lows, you know, 2021.

That certainly helped.

Yeah, I think

So that's in nominal terms before we get back to where we were in 2021, right? What about in real terms? What about taking into account inflation?

Yeah, obviously it's going to be quite a bit longer than that.

I think the key thing to note, though, the 2021 peak was unsustainable.

Our analysis looks at three key influences.

One, interest rates.

They were at record lows, you know, 2021.

That certainly helped.

Yeah, I think

So explain to me when you talk about this as being led by incomes, what is happening to my income that I'm suddenly going to go out and start firing up the housing market?

Well, that's the thing.

Normally, the housing market would lead the cycle.

This way, it's the other way around.

So what we're really looking at is more of an income-led expansion, and that's why it's going to be more gradual.

Essentially, what we're looking at are things like housing affordability is less of a challenge than it was a few years ago.

And places like Christchurch, that is a real example of what affordable housing can do.

How do you have so many houses coming on stream but the price still goes up?

How do you have so many houses coming on stream, but the price still goes up?

Well, that's-- it's really, it's ma- it's really meeting the market.

So basically, the c- c- about half of the consents being issued are basically, uh, sort of, you know, your, your apartments, non-standalone housing, and that's really where, where people wanna live, and it's really where people can afford to live as well.

So, you know, the old model where we had a quarter acre section with a house, that is sort of gone now, and people are now sort of adapting to the new, new reality, which is basically, um, asset prices reflecting what the income generation capacity can do.

So we're talking really sort of moderate increases in house prices rather than the boom and bust cycles of old or-

-none would be more engrossed than your particular government and country because the machinations I would, uh, imagine are enormous.

[lips smack] Yeah, I think it's really interesting at the moment, um, not only because of the very powerful rise of the far-right leader, Roberto Menacci, who's got about 7% of the popularity at the moment, but he, he is also, uh, up against the Deputy Prime Minister, Matteo Salvini, the head of the League, who described the AfD win as an extraordinary success, and he called it all about democracy.

Now, that puts him against his coalition partner, the Forza Italia.

So what you're telling us, and this is interesting, what you're telling us, the days of double digits are gone, but we can see, fingers crossed, some reasonably steady ongoing growth.

Yeah, that's the key thing.

I think we looked at the three of the key deter- determinants for house prices.

Now, the COVID period was pretty much a, of a, uh, abnormality.

So the reason why things got so h- hot there was basically interest rates were at record lows, population growth was very strong, and buyers didn't have much choice.

Those things have flipped around, so that trend decline in interest rates over the last 30 years, that looks to run out.

Two, population growth is looking more stable and slower.

How do you have so many houses coming on stream, but the price still goes up?

What's the difference and, and does that change much?

Yes.

I, I think the imported stuff is the real swing variable.

That's, that's where you get the real swings in inflation from.

So things like, uh, we saw welcome f- f- falls in fuel prices, uh, in July.

Uh, but we did see things like international airfares going up, so there's a lot of volatility i- in those figures.

But really in a broad sense, what we are seeing now is a lot of those sort of cost increases from the Middle East are now sort of turning around and starting to decline, and that's really welcome news for consumers.

Cash rate at what eventually? A bit over three?

What's the difference and, and does that change much?

Yes.

I, I think the imported stuff is the real swing variable.

That's, that's where you get the real swings in inflation from.

So things like, uh, we saw welcome f- f- falls in fuel prices, uh, in July.

Uh, but we did see things like international airfares going up.

So there's a lot of volatility i- in those figures.

Okay, cash rate at what eventually? A bit over three?

So should we expect inflation to sit just a little bit higher?

Yep.

What will happen will be inflation did go well above $100 a barrel back in April.

It's now around 70.

So what will happen is w- we will see inflation pick up in the very short term, but as the, as the price of oil falls to around 70 to $80, which is our expectation, that's where w- we will see inflation cool from there.

So really what the inflation t- spike does is, uh, it sort of, what it does is create a lot more cyclicality in the inflation numbers.

But looking at the medium term outlook, really what lower and more stable oil prices does suggest is that medium term inflation will be lower.

Now, um, [lips smack] is it a slam dunk, do you think, for next month, or is it gonna be a close vote?

So should we expect inflation to sit just a little bit higher?

Yeah, what will happen will be inflation did go well above $100 a barrel back in April.

It's now around $70.

So what will happen is we will see inflation pick up in the very short term.

But as the price of oil falls to around $70 to $80, which is our expectation, that's when we will see inflation cool from there.

So really what the inflation spike does is it's sort of what it does is create a lot more cyclicality in the inflation numbers.

But looking at the medium-term outlook, really what lower and more stable oil prices does suggest is that medium-term inflation will be lower.

Now, is it a slam dunk, do you think, for next month, or is it going to be a close vote?

So should we expect inflation to sit just a little bit higher?

Yep.

What will happen will be inflation did go well above $100 a barrel back in April.

It's now around 70.

So what will happen is w- we will see inflation pick up in the very short term, but as the, as the price of oil falls to around 70 to $80, which is our expectation, that's when w- we will see inflation cool from there.

So really what the inflation t- spike does is, uh, it sort of, what it does is create a lot more cyclicality in the inflation numbers.

But looking at the medium term outlook, really what lower and more stable oil prices does suggest is that medium term inflation will be lower.

Now, um, is it a slam dunk, do you think, for next month, or is it gonna be a close vote?