The Mood in New Zealand [2003]
The Reserve Bank announced in January 2003 that it had been surprised by the level of consumer confidence expressed in New Zealand right till the end of the year.
That's obviously the difference between economists and social trends analysts - we weren't surprised at all. Not only has there been a strong positive mood throughout 2002, its effects have begun to compound.
New Zealanders' relatively high degree of optimism for the future is based on the belief that they are now strong enough and alert enough to cope with whatever comes their way - and smart enough to make hay while the sun shines.
Underlying this view is a fundamental adherence to a shared social contract. Not one that involves the government, but one that says simply: if you work hard enough you're allowed to have the same things that other people have.
This underlying theme was perhaps somewhat obscured in the years after the second world war by the state subsidisation of everything from sheep to motherhood - or so taken for granted that the implementers never thought they'd need to actually encourage New Zealanders to work hard.
It has now re-emerged as a dominant element in many people's thinking about their entitlements and their social obligations. If in doubt, work hard. If it all turns to custard and you worked hard, it wasn't your fault.
New Zealanders in working couples have an added hedge against adversity - but times of relatively high job security are especially rewarding to them - giving them the opportunity of stashing a reserve away, doing some hard out saving, paying off debts, buying a few luxuries or perhaps relinquishing an income temporarily for reasons of study or children.
However New Zealaders know that anything could happen now. Many people have a philosophy of living each day to the full and keeping their options open, precisely because the future is so uncertain.
In Windshift's 2002 survey, a majority of employees (63%) believed they could cope financially with job loss and many (78%) believed they could move quickly from one job to another.
Consumer optimism rarely causes economic growth to begin, but it clearly plays a major role in sustaining it.
The current situation began with a rise in commodity prices and the impact of the global labour market on the money people could earn here and overseas.
But it has been sustained by consumer spending, building activity and the increasing salience and attractiveness of New Zealand as a destination for tourists, migrants and investment. From this beginning, a feedback loop emerges that rewards optimism and discourages pessimism.
The danger in such situations, is that irrational or exaggerated expectations might rise out of this virtuous circle to blow the lid off the top of a growth surge and produce a bubble.
Remember what Joseph Kennedy said about the shoeshine boy who asked him for a stock tip in 1929. Keeping it real and grounding expectations in observables - like how well your employer is doing and how much you have in the bank - is a very important element of sustained growth.
The other aspect of the current optimism that leads one to suspect that prolonged growth is possible, is the fact that more and more households seem to have the desire and the means of riding out the peaks and troughs of the economic cycle.
They use financial instruments like flexible mortgages and credit cards, and they spread the risk with dual income households and their ability to move quickly from one job to another - the employee's form of diversification.
They aren't perfectly resilient, since they often seem to have little in the way of savings. But by comparison, businesses - especially the small and medium businesses which employ most New Zealanders - seem far more likely to lurch from feast to famine - with resulting job fluctuations.
Often they are undercapitalised, with inadequate reserves, little access to borrowing and too many eggs in one basket. Since the state of these firms is almost immediately reflected in consumer expectations, it would seem practical and useful that they do what the households have done and work on developing their own kinds of resilience.
The beauty of this potential virtuous circle of optimism is that as New Zealanders realise they are getting better at maintaining a stable, positive economic position (despite erratic global patterns), their optimism will only intensify.
This fundamental psychic strength can be enhanced by honing our ability to judge the gaps and slide through global economic downturns - both individually and collectively. If we don't lose our heads, we may keep our spirits up, and with them, our future prospects.
"New Zealaders know that anything could happen now. Many people have a philosophy of living each day to the full and keeping their options open,"
