Economists in New Zealand are highlighting the limitations of traditional economic indicators, arguing that key metrics like unemployment rates and gross domestic product (GDP) do not provide a complete picture of economic well-being. Murat Ungor, an economist at Otago University, noted that the unemployment rate only counts people actively seeking work, missing those who want more hours or have stopped looking. He suggested that the underutilisation rate, which captures broader labour market slack, often tells a more useful story.
Ungor also pointed out that GDP measures total output but not how it is distributed or how it feels to individuals. He emphasized that GDP per person can differ significantly from total GDP, especially in New Zealand due to migration fluctuations. The consumer price index (CPI), which tracks a basket of goods, may not reflect individual household experiences, particularly for renters, mortgage holders, and retirees who face different cost pressures.
To gain a fuller understanding of the economy, Ungor recommended combining traditional data with distributional data, household-level cost measures, wellbeing indicators, and international comparisons. Matt Roskruge, an economist at Massey University, agreed, stating that no single measure can capture the entire economic picture. He advocated for a small set of well-chosen indicators that can be tracked consistently over time.
ANZ chief economist Sharon Zollner noted that transaction data is becoming more useful for gauging economic activity, but survey data is declining in quality due to public reluctance to participate. Despite the limitations of current economic data, Zollner asserted that it remains valuable and correlated with what people truly care about.