The lefties put an interesting spin on Vernon Small’s Dom-Post story today portending a further 60,000 workers losing their jobs by next year.
Note Alf’s use of the word “portending”. This is the stuff of economic forecasting, notoriously subject to change.
Just take a look at the positive forecasts from the Treasury in December 2007, which fast came unravelled as the recession took hold in 2008.
Never mind. Small sees this as jolly good stuff for a story.
Unemployment is now set to go above the Treasury’s previous worst-case scenario of 7.2 per cent, leaving a further 60,000 people jobless by next year.
Officials’ latest predictions are increasingly pessimistic, as the recession appears likely to last more than two years.
But Prime Minister John Key says he is sticking to his “optimistic and sunny” approach, predicting a rebound at the end of the year.
The Treasury warned yesterday that the recession, which started in January 2008, would last at least until March 2010.
The outlook was now worse for 2009 and 2010 than even its most pessimistic view last December.
It had forecast unemployment to peak at 7.2 per cent in 2010. Though it has not updated that forecast, it seems certain the May 28 Budget will predict much longer dole queues next year. It is also likely to forecast a big blowout in Budget deficits and in extra borrowing to pay for them.
At The Standard, it came as “a shock” to read that John Key’s response to this latest news is to stick firmly to his “optimistic and sunny” approach.
It’s almost like he’s living in some alternative reality.
While Bill is quietly crapping himself about the oncoming recession, Key could hardly look further out of touch.
Bill – of course – is the Minister of Finance, charged with trying to minimise the magnitude of the inevitable Budget deficit.
The much more sanguine comment comes from Adolf at No Minister, who says of Small:
His effort in the DomPost this morning is just what is needed if we want to ensure the recession goes on just as long as possible.
Then he turns on the officials responsible for the forecasts:
The trouble with Treasury forecasts is that the forecasters are a leather arsed bunch of gloom merchants who have never ventured out of Wellington and who ALWAYS hedge their bets by being ultra conservative. Adolf can’t remember when Treasury ever provided accurate predictions of surpluses in good times or deficits in bad times.
It’s quite damaging to harp on about predicted job losses without taking into account (a) the new jobs being created in some industries or (b) the unpredicted prosperity already flowing in from the export sector or (c) the likely effect on our prosperity of a major drop in value of the US dollar resulting from Obama’s amateur and destructive intervention on the US economy or (d) the recent upsurge in the Auckland housing market.
There’s no doubting pessimism feeds into business confidence, and business confidence feeds into business investment and hiring decisions.
Next thing you know, an overdose of pessimism has hastened the economic downturn, generating even more pessimism.
And so on.
Adolf goes on:
John Key is absolutely right to take an optimistic viewpoint and Adolf hopes he calls the head of Treasury in for a stern chat. This sort of pessimistic nonsense is almost treasonous.
The same goes for Small’s writing it up as if it were some sort of gospel, and to the editor who gave it front-page treatment.