Mike's Minute: The unemployment rate suggests hope
Our old friend Adrian Orr has decided Donald Trump will be slightly inflationary and that peak free trade is over. On both counts he is right. He is not always right. He wasn’t right this week on the jobs, when he thought they would be 5% by way of unemployment. And I don’t think he's right when he talked in his fiscal risk report that more jobs will lead to more mortgage defaults on housing. If we have learned one thing out of this whole mad Covid experiment it is that New Zealanders and our relationship with housing is something out of the box. It's obsessive. If we don’t believe it’s a right to own a house, it's certainly on the “to do” list and we work awfully hard to make it happen. And having made it happen, we ain’t letting go easily, which is why the mortgage cliff never happened. All the doom and misery around all the houses that would be foreclosed on never came to pass. So a few more job losses isn't going to add to the calamity that never happened in the first place. An interesting question to ask is whether Adrian's conservatism has, and indeed continues to, hold us back. He has a “just in case” feel about him. I refer to the amount banks have to keep aside for things that so far haven't happened, the jobs that might be lost that in fact weren't, the money all the banks needed for free during Covid so they could spray it about to protect a lot of stuff that, as it turned out, didn’t need protecting. This is not to say things haven't been, and aren't, bad, because they are. Adrian has made a godawful mess of it all, as bad as anywhere and worse than most. But this week I think we saw a bit of hope. The jobless rate is still to rise, but if the forecasts were wrong now, my bet is those who think it could go to 6% will be wrong next year. The mood has, or is, changing. People don’t want to be any more down than they have to be and the tide, my gut tells me, is turning. Even Adrian saw better times ahead for farming in his report. I see it for farming and, indeed, for most of the rest of us. See omnystudio.com/listener for privacy information.