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.

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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.

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.

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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.

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.

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.