Statistics New Zealand released the December 2009 consumer expenditure figures last week, showing “core” retail spending on credit and debit cards continued to be flat through the month, with a trend rise of just 1% since June last year. Reserve Bank figures also showed that fewer consumers were using credit cards to splash out at Christmas, displaying rather more responsible behaviour than we normally see.
In our favourite quote of 2010 so far, ASB economist Nick Tuffley captured the spirit of the times when he observed “People have been resorting to spending money they actually have.”
Similar slow cooking trends were evident across the economy. The NZ Institute of Economic Research [NZIER] said it found business confidence had “stabilised” [our translation: “dropped”] in the December quarter, following rapid recovery earlier in the year. 31 percent of firms were optimistic in the December quarter, down from 36 percent in the September quarter.
“The economy remains in a holding pattern: expectations are rising across most indicators, but these are yet to be translated into action,” NZIER said last week.
In other words, as we’ve been saying for some time, the economy is recovering, but at a turtle’s pace. Executions will continue until morale improves.
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