Riding out the (lockdown) storm

  • The current lockdown/tightening of Alert Level restrictions will cool strong momentum in household sector activity.
  • COVID-19 adds uncertainty to the outlook, but firms and households have been here before.
  • Provided the lockdown does not drag on, we expect a strong post-lockdown bounce in household spending and overall GDP. Households should prepare for higher borrowing costs.

The household sector has been at the forefront of the domestic post-COVID-19 expansion. The combination of strong household balance sheets, increasing household incomes, record low average interest rates for the household sector and Kiwi’s love affair with property and durable spending has been in evidence. This has resulted in a strong momentum in economy-wide household spending and economic overheating, notwithstanding the significant post-COVID-19 hit to many NZ firms and households.

The recent delta variant outbreak and subsequent lockdown have cooled things down. A number of households will bear the brunt. Uncertainty is high, but firms and households have been through this before and are generally resilient. Providing the lockdown is short-lived (weeks rather than months), our view is that household spending will be temporarily dampened, followed by a decent rebound.  Households should prepare for higher borrowing costs.

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Nick Tuffley

ASB Chief Economist

Since starting out in 1997 as an economist, it's fair to say Nick has seen a few hair-raising moments over the years, including the Asian Financial Crisis and the Global Financial Crisis.

One of Nick's strengths is his ability to communicate complex ideas in a readily understandable and entertaining way.  He thrives on helping people understand the economic environment to help enrich the quality of their business or personal life. He’s proud to lead a team that has won two Forecast Accuracy Awards from Consensus Economics, and has a strong track record with their Official Cash Rate and dairy price forecasts. 

Nick grew up in Christchurch and graduated with a Master of Commerce degree from the University of Canterbury.  He learned his economic ropes at the Reserve Bank of New Zealand before a long stint as a Senior Economist at Westpac, and joined ASB as Chief Economist in 2007.

Mark Smith

Senior Economist

Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.

His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.

Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.

Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.

When not at work Mark likes to travel, keep fit and spend time with his friends and family.