Who is going to benefit from GDP growth?
“Yes, there is growth in the economy, but the big question now is who will benefit from it”, says CTU Economist Bill Rosenberg. “The 0.9 percent growth in the three months to December 2013 was about what was expected, but we have yet to see the results in sharply falling unemployment and good wages growth.”
Business investment, which drives jobs growth, had been expected to be booming by this time but is looking surprisingly weak. In December, Treasury forecast 11.7 percent annual growth in market investment by March 2014. Business investment grew only 0.9 percent in the December quarter, with only one good quarter growth (7.4 percent in June) during 2013.
“Tuesday’s productivity statistics for the year to March 2013 showed average wages were falling behind labour productivity increases again: another sign that wages are stagnating and workers are not getting a fair share of what growth there has been in the economy. Wages rose quite strongly until mid 2009, with some momentum from wage settlements prior to the global financial crisis. Since then, the bottom of the recession, labour productivity has increased 10.1 percent but the average wage after inflation has risen only 0.6 percent. Even in the year to March 2013, labour productivity rose faster at 2.1 percent than the real average wage (that is, after CPI inflation) which rose 1.5 percent.” Rosenberg said.
“Household purchases are also consistent with some households doing well and feeling confident enough to buy new appliances and furniture while others can barely afford to pay for necessities such as groceries and electricity.” Rosenberg said.
“The growth is heavily driven by progress on the Canterbury rebuild and strong commodity exports. What happens when this music stops?” Rosenberg said.