Nau mai, haere mai.

Going by some coverage of recent interest rate drops, you could be forgiven for thinking the economy had truly turned a corner and New Zealand was bouncing back from the bottom.

Economist Geoff Bertram begs to differ. Applying some basic macroeconomic analysis, he writes today, presents a very different picture. What he describes as the government’s austerity programme is, he says, pushing the economy further from recovery and locking in a recession.

Bertram also questions the assumption that the Reserve Bank has had much tangible impact on inflation. By using interest rates as the weapon against inflation, he argues, it has squeezed manufacturers, tourism and farmers, while leaving the non-tradeable sector – banks and electricity companies, for example – unscathed and super-profitable.

Is there a gap between the “good news” of declining inflation and interest rates, and people’s experiences in the real economy? It seems so.

As we reported earlier, small businesses may be finding today’s conditions tougher than during the global financial crisis. And this week’s 1News Verian poll found 66% of those surveyed thought the country was either no better or worse off than before the election.

Well, the government is only a year into its term, so perhaps we should suspend judgement for now. But Bertram’s perspective also provides a useful counterpoint to any premature claims of sunlit uplands ahead.