KEY POINTS:
Kiwi households are safe from the worst effects of the United States crisis - and may actually benefit when it comes to petrol and food bills.
Economists spoken to by the Herald said tax cuts, cuts to the official cash rate and a lower dollar would help cushion
us from the financial fallout on Wall Street.
But with job growth and investments like KiwiSaver looking shaky, New Zealand families would not escape the crisis completely.
INTEREST RATES
Council of Trade Unions economist Peter Conway said the official cash rate could fall as low as 6 or 6.5 per cent by the end of the year, spelling good news for homeowners.
The Reserve Bank is expected to give earlier and more generous cuts to offset the soaring cost of borrowing overseas. But if retail banks have to absorb the savings to pay for higher offshore borrowing costs, homeowners may see little of the money.
Mr Conway said high interest rates could be an "ugly" contrast to falling house prices.
JOBS
Economists agreed higher interest rates and falling US demand for New Zealand's exports could mean fewer jobs for Kiwis.
But Westpac chief economist Brendan O'Donovan said the New Zealand dollar should fall over time with softer commodity prices - helping exporters and creating new jobs. Mr Conway noted the job market was starting from a strong position, with about 140,000 fewer people on unemployment benefits than a decade ago.
KIWISAVER
People with shares and stocks, including those in KiwiSaver, had already seen their investments fall this year. Mr O'Donovan said a dip in retirement funds would not hurt most people now. Mr Conway agreed, saying losses for most investors would be smoothed out over a number of years. But not all the pain can be put off: when the sharemarket drops there is less wealth around, and the economy suffers.
PETROL
Petrol prices fell yesterday as a big fall in the crude oil price coincided with a slight rise in the New Zealand dollar.
Shell moved first, dropping petrol 4c a litre to 195.9c and diesel 6c a litre to 153.9c. Gull's prices fell to 194.9 for petrol and 152.9 for diesel, while BP, Caltex and Mobil all moved to 195.9c and 153.9c.
Industry observers said there may be room for prices to fall further in the coming weeks - but as usual it all depends on our currency. The volatility of the New Zealand dollar in recent weeks has blunted the effect of a 39 per cent fall in the crude price since July's record highs.
Since fuel affects food costs, cheaper petrol could take the sting out of two big household bugbears at once.
IMPORTS
A lower dollar is bad news for those who buy imports, so cars, computers, clothes and electronics may be set to go up. Mr O'Donovan said a 10 per cent fall in the dollar would be the equivalent of a $1 billion wage cut for New Zealanders - something we can ill-afford in a slowing job market.
As well, a lower dollar means the benefit of falling oil prices could be lost before the fuel gets to New Zealand.
FOOD
Mr O'Donovan said food prices were unlikely to fall. But supermarket bills would rise less than they would have without the US crisis. Lower commodity prices would take the pressure off prices for milk, butter and cheese; all big factors in this year's record food bills.