The growing number of consumers and businesses defaulting on debts shows the recession is continuing for many New Zealanders.
According to the country's largest credit bureau, Veda Advantage, the number of people defaulting on bills in the first nine months of this year was almost 18% higher than the same period last year.
More than half of the country's companies also had outstanding debt - a total of 336,716 firms. Of this, $12.2 million is overdue by 90-120 days and will probably go into default.
Wellington Employers Chamber of Commerce chief executive Ken Harris says companies' cash-flow quickly chokes off if customers default.
"New Zealand business operates on very low margins ... they just don't have the kind of reserves and the kind of margins that can accept this problem."
Mr Harris says the high number of defaults reflects pressure on households, but, in a double-whammy for businesses, even people who still have jobs are not spending.
Baby boomers lead default increase
Veda Advantage says defaults by baby boomers have increased by more than 20%.
Federation of Family Budgeting Services chief executive Raewyn Fox says many people in that bracket, who lost their jobs in the recession, have been unable to find equally well-paid positions.
Increasing numbers of home-owners are struggling to keep up with mortgage payments, she says, and people who are heavily mortgaged are deferring other bills to try to keep a roof over their heads.
The credit bureau reports defaults by Gen X were just over 19% higher and defaults by Gen Y increased 15.34%.
The statistics also show continued consumer resistance to credit cards with applications for the nine months to September 2010 down more than 13% on the same period last year.
Veda Advantage managing director John Roberts says the message to stop spending may have gone too far, and may be slowing the economy.
He says there has been a fundamental shift in people's attitude to credit, with consumers exercising caution and opting to save.
But the economy has suffered three years of decline in credit demand which has been reflected in GDP growth in the economy.