Of these instances, the 2000 ‘winter of discontent’ appears the most similar to today. The economy had rocketed out of recession but lost its mojo with the change of policy direction.
The effects were real – firms delayed hiring and investing – but growth bounced back aggressively after bottoming out around 1 per cent.
There are some key differences from today. Then, the Reserve Bank of New Zealand cut the official cash rate by 175 basis points (a move which was quickly reversed). It was also much earlier in the economic cycle.
Today the economy is grappling with late-cycle challenges: capacity constraints, labour shortages, rising costs and a softening housing market to boot. While monetary policy is still stimulatory, rate cuts are not on the agenda.
In these circumstances, we might just succeed in talking ourselves into a hole. At the very least it increases the economy’s vulnerability to a traditional ‘exogenous’ shock - for instance, to our terms of trade or global liquidity. But left well enough alone, the economy can still muddle through.