An economist has warned it's a matter of "when not if the recession starts" as consumer confidence hits a three decade-low.
The Westpac McDermott Miller Consumer Confidence Index released on Tuesday showed consumers have never been as hesitant since the survey began 34 years ago. The index fell 13 points in the June quarter to just under 79.
Infometrics principal economist Brad Olsen told AM on Wednesday the results show consumers expect things to continue to get worse.
"Just that headline number that at the moment households are at their most downbeat on record since 1988," Olsen told AM Early host Bernadine Oliver-Kerby.
"Remember that shows us and tells us that households think the economic outlook is grimmer than during the recession of during the early 1990s, worse than the Global Financial Crisis, worse still than the start of COVID-19 when we thought that the Great Depression 2.0 was upon us."
StatsNZ last week announced gross domestic product (GDP) had fallen 0.2 percent between the start of January and the end of March this year.
The drop raised concerns New Zealand is on the way to a recession, which is two consecutive quarters of negative growth.
Olsen didn't ease those fears, warning it's only a matter of time until New Zealand experiences a recession.
"We were always thinking things were going to get worse. Households were never going to be particularly pleased with interest rates starting to head higher, but the level that we are seeing now really does highlight how much pressure households are under," Olsen said.
"It really probably sets the tone for the risk that the recession is coming and in fact, let's be real, when households are telling us it's this grim, it really seems to be a question of when not if the recession starts to come through."
Olsen said the survey results showed the lack of confidence isn't limited to a group or region and is right across the board.
"That's probably the most stunning thing, is you do see it very much as a broad base expectation that things are going to turn worse," he told AM.
"It probably shows that after two years of a huge sugar hit into the economy, things are very much starting to come off the boil."
It's not all doom and gloom, with economists at two of New Zealand's main banks last week saying they were expecting positive growth in the June quarter given people were coming out of Omicron isolation, increasing activity.
Prime Minister Jacinda Ardern also took a positive view that New Zealand is ready to weather the current economic "storm".
Watch the full interview with Brad Olsen above.