Whether it is by luck or skill New Zealand is not running either too hot or cold.

The US economy continues to surge back to life, moving into territory which some economists describe as "full employment".

Americans who are still without a job may disagree. But the stronger than expected jobs report released over the weekend exceeded market expectations and showed unemployment in the US has now fallen to 5.5 per cent - the lowest in almost seven years.

That's also a figure which is in the US Federal Reserve's range to be considered as full employment.

And that was enough to reassure markets that the bank is still on track to lift US interest rates by September, perhaps even June. The greenback soared on the news - hitting its highest level against the euro since 2003.


So keep an eye on the New Zealand dollar today.

In theory it should come under pressure as markets react.

Immediately after the news on Saturday the Aussie dollar hit its lowest point in six years against the US.

The kiwi should fall too, although perhaps - with dairy prices stabilising - not quite so much.

The creep towards parity with the Aussie dollar - the kiwi was trading at about A95c yesterday - won't necessarily be derailed by the US comeback - in fact it could be exacerbated.

But picking currency moves is fraught with danger. There are always so many variables at play. And the factors in the global economic equation are now more complex and disparate than they have been for some time.

Let's take a look at the big pieces of the puzzle:

•In the US, growth is accelerating and confidence is high.


The end of stimulus may finally be nigh. This pushes our dollar down and is good news for New Zealand exporters. US Equity markets are at record highs and remain a key risk to the US economy if investor confidence was to be rattled by some unforeseen event.

•In Europe, growth is stagnating.

Debt-laden southern nations, particularly Greece, are still a major distraction. Meanwhile, wealthier nations are heading into deflationary territory, which, as Japan has found, is a nightmare to get out of. There seems little on the horizon to break the circuit in Europe and the euro is likely to remain low for some time.

•With the luxury of its own currency and central bank, the UK is hoping to decouple from the European mire and move to a healthier growth phase this year in tandem with the US. If successful there is potential for the pound to return to a stronger place.

•In China, growth is slowing.

There are concerns about market bubbles in property and equities. Property prices are falling and construction is being scaled back. This is putting downward pressure on hard commodity prices (iron, coal and copper) and this is weighing on the Australian economy, pushing the dollar down. It has implications for New Zealand's growth because Australia remains our second largest trading partner after China.

•Lower commodity prices for Australia.

The fall certainly has Australia thinking it is in the doldrums and there seems to be a lack of confidence in the economy as reflected in the country's ongoing political infighting. The pressure there is on the Reserve Bank of Australia to cut rates further, although that was resisted last week.

•Meanwhile, back here the US-powered fall in the Kiwi dollar will also take pressure off our Reserve Bank to cut rates and even provide some room to raise rates sooner. Current thinking is that they won't this year while the effects of the poor dairy season pay-out flow through the economy.

But a lower kiwi gives them considerably more scope to alter the time frame.

A report last week by Chapman Tripp - looking primarily at the solid local conditions for increased merger and acquisition activity this year - describes New Zealand as having a Goldilocks economy.

In other words we're not too hot (low inflation), not too cold (still have solid growth), we're just right.

We're eating the good porridge right now.

The state of global economics is finely balanced with many conflicting forces at play but somehow they continue to be broadly favourable to this tiny Pacific nation.

Whether that is due to the flexible structure of our economy, good economic management in the past few years or just plain luck is probably the starting point for a good political debate.

Perhaps it is a bit of all three.

But recognising that things are going well makes sense even for political parties in opposition because it allows them to move the debate towards how we address some of the very real social issues New Zealand does face.

If we are truly in a Goldilocks phase then now is the best time to be investing in ideas to address poverty and inequality.

Now is the time to be taking steps to ensure New Zealand's long-term social stability, because when you look around the world it is clear that this is one of our greatest strengths.