That's a rather sensationalist headline. Written by an Australian looking at graphs, rather than having a feel for what's going on.
I'm sure he's a capable economist, but based on what I see, New Zealand is not "plunging". There's definitely a slow down - but I think most businesses are expecting a relatively soft landing.
I guess time will tell.
ITT: Lots of people from overseas wondering how New Zealand's mortgage and housing market works.
This post is wrong, we're not in a recessionary spiral. Households (and banks!) are overall doing fine. Unemployment is at record lows, wages are rising faster than inflation, non-performing (ie in default) mortgages are at 0.2% of all mortgages (lower than GFC), mortgages are stress-tested to higher levels than we're seeing. Banks are extremely healthy (making money hand over fist).
Consumer confidence is low, but it's low in defiance of reality.
For more see here: https://thekaka.substack.com/p/incomes-are-rising-faster-tha...
Figure 9 looks dire: 95% of mortgage (by total value, not count) are going to have their rates adjusted in the next three years; 56% in the next year.
In the US, that'd definitely lead to a housing crisis worse than 2008. Is there something different about how houses are purchased in NZ?
As an American I was struck by the graph of mortgages by fixed term length. I guess I've always heard that US home buyers are constantly benefiting from policies propping up 30 year fixed mortgages, and I knew that other places this wasn't the norm. But it's surprising to me that a majority of mortgage debt in NZ is fixed for less than 1 year. Even in years that don't see rapid interest rate changes, this must make it very hard to plan.
I'm sensing this tremendous tension and anxiety in Canada too. Hopefully our energy sector will buoy things a bit so they don't get too terrible.
Their consumer sentiment is only at -25 for major household goods? In the U.S. it is -35!
https://data.sca.isr.umich.edu/get-chart.php?y=2022&m=9&n=35...
What do all these goofy polls have to do with a "recessionary spiral?"
The only data in this is at the end, and it is not particularly interesting. NZ homeowners will be affected by rising interest rates.
It doesn't feel like a recession but something is wrong. Our "go hard, go early" approach to covid meant we avoided a lot of tragedy but the govt printed that money. Now we're having an inflation shock leading to an interest rate shock. The shrinkflation is insidious when the packaging hasn't changed. The thing is, unemployment is so low, it's like the whole country is running to stand still.
What are the chances the private sector wants to play up the possibility of recession to preempt government freebies?
“Keep buying those mortgage backed loans”, for example
“Keep those interest rates near zero”
What do they have at stake?
Wow! That's a lot of variable rate or only temporarily fixed rate mortgages!
I'm certainly no expert in all of this, how does that stack up with other countries data?
One clarification if you're not familiar with New Zealand banking. The article states:
> Last week, Bank of New Zealand warned that “things could well and truly turn to custard” as the global economy is plunged into recession.
I read that and thought "Holy hell, central bankers in the US are usually extremely measured in their comments, they would never say something like 'things could well and truly turn to custard'". I misunderstood, thinking that "Bank of New Zealand" is their central bank. It's just another big bank, not "The Reserve Bank of New Zealand", which is their actual central bank.