Wednesday, 29 November 2023
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDRIVEN Car GuideThe CountryPhoto SalesiHeart RadioRestaurant Hub
Voyager 2023 media awards
Subscribe

Advertisement

Advertise with NZME.
Home / Business

Liam Dann: All eyes on America's faltering recovery

Liam Dann
By
Liam Dann
4 Oct, 2015 09:30 PM4 mins to read
Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail
A free trade deal with the US is the holy grail for many exporters. Picture / AP

A free trade deal with the US is the holy grail for many exporters. Picture / AP

New Zealand is on the verge of signing a historic free trade deal with America and the world's largest economy may soon have more influence than ever on our economic outlook.

Too bad, then, that the US recovery is progressing so slowly that it has some economists questioning whether it is a recovery at all.

For those watching it closely over the past two years there is an air of Groundhog Day about the flow of data and ever-shifting horizon for interest rate hikes.

That's certainly the case after Friday's key jobs report.

Advertisement

Advertise with NZME.

READ MORE:
• Editorial: Clark's words on trade deal badly needed
• Drugs hold up TPP as talks near end
• Breakthrough on TPP deal

American employers added 142,000 workers to payrolls in September, fewer than the lowest estimate of 96 economists surveyed by Bloomberg.

This piece of data does seem to have rattled US economic commentators.

As sure as a couple of poor All Black performances have the New Zealand public panicking about quarter-final doom, there is growing scepticism in the US about the Federal Reserve's ability to raise rates this year.

So is the US economy spluttering? Or were economists just overly optimistic with their projections.

Expectations had been for a job growth number of about 200,000.

Related articles

Business

Wall St experts at odds on Fed direction

13 Sep 05:00 PM
Business

Returns dip but sharemarket bulls still running

20 Sep 01:00 PM
Business

Will the Reserve Bank cut in October?

20 Sep 09:00 PM
Business

Fran O'Sullivan: Dairy at risk, China free trade deal updated

25 Sep 09:30 PM

The September statistics left the US unemployment rate at 5.1 per cent and commentators saying there was no positive spin to this news.

The focus remains on whether the Fed will raise rates this calendar year and has become so intense that it surely now outweighs its importance at a fundamental level.

Advertisement

Advertise with NZME.

It has become something of an obsession for the business media there - almost to the point of national pride.

The US, like most of the West, still has no inflation to speak of. So it is hard to see why there is a pressing need for higher rates before 2016 - other than the psychological boost associated with declaring: "America is back."

Psychological boosts shouldn't be underrated, of course.

And the political pressure could simply be too much for the Federal Reserve governors, who will lean towards December regardless.

Sentiment can drive economies a long way but a real recovery needs also to be underpinned by production and consumption.

Also the confidence boost that a rate rise may bring needs to outweigh the effect of increased borrowing costs. So regardless of when the first move comes, one suspects the track for higher US rates will be looking very flat.

Advertisement

Advertise with NZME.

As sure as a couple of poor All Black performances have the New Zealand public panicking about quarter-final doom, there is growing scepticism in the US about the Federal Reserve's ability to raise rates this year.

In New Zealand we currently feel the effects of the Chinese slowdown more acutely but the US malaise continues to exert as much influence over the global economy.

The pending Trans Pacific Partnership highlights New Zealand's place at an interesting historical juncture, poised between two hemispheres in economic outlook and, increasingly, in cultural outlook.

Our Free Trade Agreement with China has been dynamic and valuable. It has underpinned growth in this country through most of the global financial crisis.

But a free trade deal with America remains the holy grail for many New Zealand exporters.

In the US, as it has here, China's slowdown is now getting the blame for the sluggish economy.

The commodity slump and fall in global exports has not helped it rebound.

Advertisement

Advertise with NZME.

The rise of the domestic oil industry over the past decade has made this current cycle of cheap oil less beneficial than it was for America in the 1990s.

Fuel has been cheap for more than a year now.

In an already deflationary environment the upside for consumers hasn't outweighed the macro effects of a depressed oil industry. Nor has it provided as much of a job-creating boost for the wider industrial sector as it once might have.

The slow pace of the US recovery is disappointing for Americans and it is for us, too.

When America booms it really booms.

New Zealand would certainly feel the effect that an American economy in top gear brings to other export markets. And we'd feel it directly through tourism and trade - perhaps more than ever if we are part of a US-inclusive free trade deal.

Advertisement

Advertise with NZME.
Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail

Advertisement

Advertise with NZME.

Latest from Business

Business

Google to start deleting ‘inactive’ accounts this week. Here’s what you need to know

28 Nov 07:43 AM
New Zealand

Wrappers delight - rappers get to grips with Christmas

Premium
Business

Juha Saarinen: Reviewing the Oppo Find N3

28 Nov 06:00 AM
Premium
Business

Market close: NZ stocks bounce back while Gentrack surges after profit turnaround

28 Nov 05:19 AM

Navigating the ‘decade of uncertainty’

sponsored

Advertisement

Advertise with NZME.

Latest from Business

Google to start deleting ‘inactive’ accounts this week. Here’s what you need to know

Google to start deleting ‘inactive’ accounts this week. Here’s what you need to know

28 Nov 07:43 AM

Have a Google account you haven’t used in a while? You may want to sign in before Friday.

Wrappers delight - rappers get to grips with Christmas

Wrappers delight - rappers get to grips with Christmas

Premium
Juha Saarinen: Reviewing the Oppo Find N3

Juha Saarinen: Reviewing the Oppo Find N3

28 Nov 06:00 AM
Premium
Market close: NZ stocks bounce back while Gentrack surges after profit turnaround

Market close: NZ stocks bounce back while Gentrack surges after profit turnaround

28 Nov 05:19 AM
How to make a win-win-win from waste
sponsored

How to make a win-win-win from waste

About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2023 NZME Publishing Limited
TOP