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Heather du Plessis-Allan: We're experiencing the economic 'sugar crash'

Author
Newstalk ZB,
Publish Date
Tue, 15 Feb 2022, 7:11PM
(Photo / File)
(Photo / File)

Heather du Plessis-Allan: We're experiencing the economic 'sugar crash'

Author
Newstalk ZB,
Publish Date
Tue, 15 Feb 2022, 7:11PM

It feels like we’re turning a corner in how we feel about the economy. A bunch of negative things seem to be hitting us all at once. 

For the last couple of years, we’ve been feeling really flush. 

Our house prices have risen, our businesses have boomed, we’ve spent our spare cash on buying nice things for ourselves. 

But now, it’s a different story. 

House prices are clearly coming off the boil. All the recent data shows that. REINZ data, out today, that shows quite a drop, 48%, in house sales month on month. 

Barfoot and Thompson data last week showed only 27% of houses going to auction, in one week earlier this month, actually sold. 

Add to that inflation, rising food prices, the rising cost of your mortgage as interest rates go up. 

Then there’s the rising cost of doing business, the minimum wage going up again, the difficulty getting supplies into the country. 

There's no economic rebound after this last lockdown like there was after all the others: people are isolating because they’re afraid of Omicron in the community, which means they’re not spending as much as they used to. 

And so, every one of us by now will know of a business struggling to survive. 

I grabbed a coffee this morning at my local. The manager told me how badly business has dropped in the red setting. They’re doing 70% of what they should be doing, and they’re doing well, compared to other places around town who he reckons will have to close.  

This isn’t unexpected. 

We always had to come off the sugar rush high of all that money being pumped into the economy. 

It’s like we filled ourselves up on fizzy soda for two years and now we’re just experiencing the sugar crash on the other side. 

But what this does is, it changes the topic. It's probably the biggest conversation changer we’ve seen in two years. 

I reckon the economy will become the topic as the year goes on as Covid becomes increasingly background noise. 

And this makes politics interesting this year, because if Covid is Labour’s mastermind topic, the economy is Nationals’ mastermind topic. 

A souring economy never plays well for an incumbent government. 

So, I’d expect that as the year goes on and we all feel less flush, it could open the political game right up. 

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