So it's all going along nicely, is it?

Did you notice the recession? Did it savage your household or neighbourhood? Have you noticed that things are looking up now and it’s (nearly) fine, sort of?

Or did you only know there was a recession because economists and politicians kept banging out numbers of gloom? Is it the same with the sort-of lift?

House prices are back to levels of a year ago. Mortgage rates are low. Incomes have gone on going up for those in work. The unemployment benefit total is under 60,000. The credit card has needed attention but pollsters report far more optimists than pessimists.

Sure, this is not the heady mid-decade boom when it seemed you could safely get richer by raising the credit limit or buying a bigger house. We have been reminded that house prices can go down as well as up and that a higher credit limit is a liability, not an asset.

But Michael Cullen injected a lot of cash into the economy in last year’s budget and Bill English jabbed in a fair amount more in his first budget. Between them they delivered a “fiscal impulse” of around 5 per cent of GDP — old-fashioned Keynesian budget management to kiss it all better for nervous voters.

Bill English nevertheless maintains a sober demeanour, proving that even Catholics are Presbyterian in once-Scottish Southland. English wants us to stay on the wagon until his budget is back in surplus.

That will be in 2016, the Treasury estimated on Tuesday, not 2018 as it said in May, because the world recession wasn’t as bad as feared and our economy should roll along nicely for the next few years. We can gently work off the hangover from the binge years.

Do you buy this modest optimism? In two separate places in Tuesday’s half-yearly economic and fiscal update and the budget policy statement the Treasury and English stated two seriously worrying facts.

One is that rich northern hemisphere countries will have to withdraw their massive fiscal and monetary stimuluses. As that veil is drawn back on the American, European and Japanese economies we will see whether, as one commentator has put it, there is an “e” to underpin the buoyant “p” in the sharemarkets — that is, whether companies will be earning enough revenue and profits next year to justify the prices being paid now for their shares.

The second serious worry is the unbalanced world economy — huge debts in the “western” economies, now being added to at a reckless pace by desperate governments, and huge surpluses in China and other vigorous Asian economies. At some point those imbalances will unwind.

Wrapped up in those worries is another: will the withdrawal of stimuluses be managed well or hashed; and will the unwinding of imbalances be sudden and disruptive or long and drawn out? No one knows.

Where the world goes, New Zealand goes. If the rich northern hemisphere countries go sideways or down as their fiscal and monetary drugs are withdrawn and as the imbalances correct, that will hurt here.

There is fortunate modifier called Australia, supplier of minerals and hydrocarbons to the rising Asian countries and old rich ones. If Australia stays on stratocruise, that will keep us gliding on. The super-lucky country hit a slow patch in the spring but economists and politicians are telling Australians it is now going nicely and will next year.

So, you might think, rest easy and muddle through — not the time for adventurous or wrenching government initiatives. That’s what a number of John Key’s ministers think, comforted by the economists’ numbers.

Actually, much needs to change if our incomes are to stay up with pack longer-term, two advisory groups have told ministers.

The tax working group said the tax system needs major repair if it is not to be a drag on the economy. A final report goes to ministers next month.

The capital markets development taskforce, set up by Labour’s Lianne Dalziel in mid-2008, has recommended major tax changes, private part-ownership of state enterprises, banks and agricultural cooperatives, a wider range of long-term debt (including local bodies and government businesses), better capability and scale in commercialising research, a specialist agricultural market centre and an overhaul of regulations (some lighter, some tighter), with special attention to financial advisers, disclosure documents and managed funds.

The government’s response to both will be led by John Key. Ministers and officials are talking up his annual Prime Minister’s statement on February 9 to open the 2010 parliamentary year as a major outline of what they are calling the “economic growth agenda”.

Next year is definition time for Key — boldness is a first-term-only-option. This year was judged to be a time for caution because of recession. When he and English pow-wow over the summer, the underlying question will be whether fear of losing votes plus the economists’ now soothing numbers trump game-changing repositioning of the economy to respond well to whatever shocks and opportunities lie ahead.