Debt levels exposed as economic growth slows

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news a slowing pace of the global economic expansion is leaving the debt overhang as a more serious problem in many countries.</p><p>But first up today there was <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>another dairy auction</strong></a>, and on the face of it, it was a lackluster affair. Overall prices were up +0.6% in USD terms, a smaller rise than the +2.4% at the last event. This is consistent with the FAO monitoring. WMP prices were unchanged, but SMP and cheese both rose about +1.7%. However things were undermined in NZD. Overall prices dropped -2.0% in local currency as the NZD continues its puzzling rise. That means in local currency prices are down -15% over the past two months, compared to the equivalent -9% drop in USD. None of this shows were are getting on top of our deteriorating current account deficits.</p><p>Also falling away are <a href="https://www.redbookresearch.com/" target="_blank"><strong>US retail sales</strong></a>. Last week they rose less than +6% from the same week a year ago on a same-store basis. This comes at the start of the important year-end retail season and these results show they are no longer keeping up with inflation. Retail sales volumes are declining in the US.</p><p>Meanwhile, the American commercial real estate sector is facing some rejection by investors. Big and small investors are queuing up to pull money out of real-estate funds, the latest sign that the surge in interest rates is upending their commercial-property sector.</p><p>Also easing has been supply chain pressures, and by quite a bit. Their <a href="https://www.the-lmi.com/november-2022-logistics-managers-index.html" target="_blank"><strong>Logistics Managers Index</strong></a> (LMI) fell to only a modest expansion, the sl