Oh no … don’t fizz. Please don’t fizz …

Those interminably cheerful souls, the economics profession, have a term for what we are currently going through.

“Re-balancing”, they call it. Some, perhaps the more exuberant members of the profession, prefer to liken it to the hangover after the party.

The world economic party of 2003-08 saw some particularly over-the-top behaviour.

New Zealand did not quite go so far to mix economic drinks as recklessly as some countries – the United States being the most glaring example of a country which thought it would be a hoot to shove crème de menthe, bitters, and kahlua into one heady brew.

But we’re still hurting. We’re a bit like the hungover bloke who wakes, mixes himself a Berocca and liver salts, and pleads with the glass not to fizz so loudly.

Today’s GDP figures fizzed aggressively. True, the result, 0.9% shrinkage of GDP over the three months to December, wasn’t quite as bad as some were expecting.

But it is still our fourth quarterly negative result in a row, with probably a further two negative quarters to go.

But the rebalancing, the extrusion of toxins from the economic body, is happening.

Durable sales slumped badly – but since most of these purchases are paid for with debt, and since New Zealanders have been hurling back yard-glasses of debt over the past few years, this is necessary.

That slump was a big factor behind today’s February trade balance figures, which showed a surplus of $439 million.

A surplus in trade might seem a good thing – and generally it is – but it is important to remember February almost always shows a surplus, due to being the height of the farming production season. Exports taken as a whole did fall away by about 9% but the drop is almost totally from the manufacturing and petroleum sectors.

But as Bank of New Zealand head of market economics Stephen Toplis observed, exports have probably fallen as far as they are going to. Imports still have a way to drop.

The bigger concern on the imports side is capital goods. Most of New Zealand’s plant and machinery is imported and these imports have dropped right away – as you might expect, with businesses feeling the pinch as the recession bites and with the lower New Zealand dollar pushing the price up.

But that hiatus in investment will hurt the productive capacity of New Zealand’s businesses.

On the household side, the GDP figures showed disposable income dropping 0.9% for the quarter and down 2.5% for the year.

That, as Deutsche Bank New Zealand economist Darren Gibbs pointed out, shows disposable income is shrinking faster than the decline in GDP.

Again, that is part of the rebalancing. A boost though will come from next week, with the next round of tax cuts – let us think of these as a bit of rehydration after the party - kicking in.