Gross distortion the standard
The Standard loves the sats:GDP blah blah blah, inflation adjusted wharp, wharp, wharp... What about population adjusted instead? Isn't that really the performance indicator we should be using here - to find out how better off people are likely to be on average rather than just how good the economy has done as an abstract whole. GDP per capita instead of the raw GDP figures - whether inflation adjusted or not - is the better measure.
It should be easy to find.It's hidden somewhere in the Stats Dept, but I can't find it.
So using what there is available right now a simple exercise should sort it out.
Using the tables from The Standard: NZ GDP 2003-2009 in 1995/1996 prices (ie. inflation adjusted):The same timeframe in current prices (ie. not adjusted for inflation):Assuming the two tables are measuring the same thing - even though it appears they may not ("GDP by broad industry group" v. "Expenditure on GDP") - what happens when population growth is taken into account?
That Stats Dept. 2010 population right now:4,355,900.
2006 1st quarter population:4,027,947 on census night and a note that the previous 5 years the population increase was 7.8%.
1st Q 2006 pop = 4,027,947
1st Q 2010 pop = 4,355,900
movement in pop +327,953
movement % in pop +8.1%
So whatever the raw GDP number is 2006-2010 it has to beat the 8.1% increase in population to be considered a gain in GDP per capita.
If we use the "Annual GDP" figures from The Standard's tables which align closely (though not perfectly because the figures are for year ending 3rd Q 2006- 3rd Q 2009) with the population figures I have just got off the Stats Dept. website we find:
Inflation adjusted: +$3,698m = +0.97%
($128,638m in 2006, $132,336m in 2009)
Current prices: +$28,583m = +18.3%
($156,409m in 2006, $184,992m in 2009)
For a cruder equation on current prices using the population increase:
2006: 4m pop ÷ $156b GDP = $39k
2009: 4.3m pop ÷ $185b GDP = $43k
- That looks good and that's what the government likes to use - and not take inflation into account. Inflation has been running at well over 2% per year during that period. Using the RBNZ's CPI calculator to get the official inflation adjusted figures we get closer to the real story:Inflation during the period was running at 2.8% a year and amounts to 8.7%, a decline in purchasing power of 8%. I've been conservative by not putting the period back to 3rd Q 2005 too, but even with that generosity it's not looking so flash now.
So the raw number goes up by +18.3% but inflation was at 8.7% (minimum). So that $39k per person in 2006 to keep up with inflation would have to be... $42.5k - $43k. Which is pretty much where we ended up according to this data: flat-lining. It would be negative if I included inflation and population growth for the whole of the first year (3rd Q 2005-3rd Q 2006) of the financial stats. But I'll be very generous, won't do that, and say flat-lining.
It's actually a lot worse than either Bill English or the Labour opposition would care to mention. Why won't they care to mention it? Because they are both responsible for it: keep pumping in immigrants to increase aggregate demand and prop up the property prices to make the middle classes seem wealthy enough to keep borrowing, and keep up government spending regardless of whether it is necessary or productive. And where do we go? Nowhere. What has the Nat/Lab economic consensus achieved towards lifting people's standard of living? Nothing - it's static, maybe negative over the last half decade at least. Some people must have done well of course, like the LAQC landlord MPs (National and Labour) with their family trusts etc, others - perhaps the majority of the population, less so.
We have gone nowhere economically and they cannot disguise those facts on the ground even though they gross the figures up to make it appear we have. The arguments the National and Labour parties are having over the economy is delusional. Using The Standard's own inflation adjusted figures of +0.97% GDP growth to make a basic comparison between 2006 and 2009 in 2006 dollars:
2006: 4m pop ÷ $156b GDP = $39k
2009: 4.3m pop ÷ $158b GDP = $37k
Not so flash now. If we ran the ruler over earlier periods - one's that don't contain an over-supply of credit and the first year or so of a recession - I still doubt we would find anything significantly different from the anti-climactical reality of our under-performing economy thus demonstrated. Some might attempt to argue that the aging population and increases in longevity contribute to more souls doing less work, or more babies being born means mothers have to take time off work and the infants and children aren't economically active. Those factors will have some effect on GDP, but that's not going to fully explain the sort of decline we seem to be in.