Most people still waiting to see benefits of GDP growth
“The strong growth in GDP in the three months to September is being driven by the boom in commodity exports such as dairy and logs, with help from the construction boom in Canterbury and in housing, and does not mean kiwi families are sharing in the benefits of this growth,” says Bill Rosenberg, CTU economist.
“This growth is not flowing through to most people and is not working to raise living standards. This illustrates the reality that GDP growth is not a good measure of the reality most people see in their lives.”
Rosenberg says “many households are still struggling. Household consumption showed a fall in routine expenditure on things like groceries and other daily needs over the last six months. The main increases in household spending are being seen in ‘durable goods’ like furniture, appliances and cars, probably driven by the increase in house building and by spending of families in higher income households.”
“We have had one quarter of relatively strong employment growth, but unemployment has fallen very little from its peak. Business expectations and forecasts are not a substitute for the creation of decent, secure jobs and rising living standards.”
While it is good to see manufacturing, which provides many good jobs, growing strongly in the September quarter, that comes after two quarters of contraction and is still heavily reliant on food processing, in turn driven off the boom in commodity exports. Construction surprisingly fell in the quarter as a result of less infrastructure and non-residential building construction, but some of the manufacturing is also being driven by the longer-term boom in residential and commercial construction.
“The story that this is a broad-based recovery is still not convincing”, says Rosenberg. “It will certainly not be convincing for many families who have yet to see it improve their situation and their living standards.”