The Prime Minister’s comments were noncommittal:
“In the end these things bounce around quite a bit… it’s at odds with what most of the economists thought would happen.”
“Like a lot of surveys, from time to time, it can produced usual data, let’s see what happens in the next one. But it’s not going to make the Government change tack.”
Just taking these in turn:
- The fact that the figure is different from predictions could mean that predictions were wrong. Y’know, just saying — we economists aren’t psychic.
- The fact that it’s a survey does mean that there is a margin of error. I’m going to guess that Statistics NZ knows what the confidence interval is around the estimate, and could produce 95%, 99%, and 99.9% confidence intervals. I’m also going to guess that a survey with 15,000 respondents is pretty reliable, and a move from June’s 6.8% to September’s 7.3% is significant.
- ‘Let’s wait this out’ seems to be the mantra for economic policy at the moment. The other part of that mantra is ‘…because Christchurch will kick in any day now’. I’ve already expressed my thoughts on that plan.
I did wonder whether the new unemployment rate is an outlier. GDP figures didn’t look too bad; wage growth wasn’t bad. I checked statistics for Australia, and they were neither great nor awful. Anecdotally, there are people in the Wellington shopping malls (‘though I haven’t counted shopping bags) and reports from the Annual Hallowe’en Holdup were positive. So, it is worse than other numbers, but probably not enough to consider it an outlier.
On the other hand, our trading partners are struggling with problems of their own. That is likely to be affecting our economy. Also, the latest figures on re-building in Christchurch aren’t helping. Offsetting Behaviour has a nice graph. Put another way, Statistics NZ announced that earthquake-related building consents totalled $58 million for September 2012. The total cost of the rebuild has been put at $30 billion. I couldn’t find the projected costs for building consent work, but let’s put them at one-quarter of the total. At $58 million per month, doing $7.5 billion of work is going to take 10.8 years.
Just one final thought: it seems to me that the ideas ‘government is too big’ and ‘we can’t do anything about the unemployment rate’ aren’t logically consistent. If the government has too much influence, then surely its decisions affect the aggregate unemployment rate. On the other hand, if it is impotent in the face of larger economic forces, then why worry about it so much?