Are the latest unemployment numbers a winter blip or a sign of something much more serious?
I think it’s the latter.
Unemployment is at 7.3 percent – that’s a whopping 175,000 people unemployed which is an additional 13,000 more than just three months ago.
That means $449 million less tax revenue in just three months. Companies aren't hiring. People aren't getting pay rises.
We've got the wobbles and it's not because we were speeding. Why?
The world has softened: Europe has tanked, China has slowed, so has Australia and we are in trouble.
Our two big trading partners have pulled the handbrake so, combined with the high kiwi dollar, our exporters – who are our employers - are struggling.
In 2009 the Prime Minister spoke of an aggressive recovery. His offsider - the less sunny Bill English, talks about grumpy growth. You decide who you believe.
The Prime Minister's optimism and ambition is to be applauded but it simply hasn't happened. A reality check is needed and he got it yesterday.
He should not have been so “surprised” at yesterday's numbers.
To be surprised is simply not good enough. It doesn't fit his political script or his sunny outlook.
The Government says the Quarterly Employment Survey compared to the Household Labour Force Survey was showing more positive signs apparently.
That's why Key was surprised. The funny thing is, the Government ignored the Quarterly Survey last week when it showed manufacturing jobs had collapsed by 40,000.
The Government promised 170,000 new jobs over four years in 2010. Where are we at? Bill English told me yesterday he has no idea and that he'll tell us in December.
So Labour has crunched the numbers.
“John Key needs 48,125 more people employed to be on track to fulfil his election promise to create 170,000 more jobs," says Labour's Finance spokesperson David Parker.
"National promised 170,000 more jobs. They are way behind. They needed 53,125 more people to be employed over the past five quarters to be on target. They only had 5,000. They need an astonishing 48,125 more people employed to be on track. Not that they would know it,” he says.
Labour's answer is to support manufacturing somehow, change the Reserve Bank's focus and bring in a capital gains tax.
As one economist said to me this morning: “Where is Labour? That won't change much - and it's certainly no step-change”.
So where to from here?
Key says now is not the time to change course. But economists are all largely saying the economy has gone into a fragile state.
Ganesh Nana predicted this scenario months ago.
“Without changes to our policy settings, the short term picture is not pretty, with our models projecting even further rises in jobless numbers,” he said.
A change of course is urgently required if New Zealand is to avoid yet another damaging recession.
The Government was shell-shocked by yesterday's numbers, but it's praying with its fingers crossed that things come right.
It's risky. The expensive tax cuts from three years ago have had little impact.
Christchurch needs to be rebuilt fast and Auckland has alarmingly softened, although its house prices haven't.
That's seriously concerning, especially when your second largest city is in rubble.
Forget gay red shirts, comments about ‘batsh*t’ and what Key knew or didn't know about Dotcom.
This blows all that away in terms of importance. This is fundamental. This is the serious stuff.
It's people's lives, their jobs, their mortgages, their families, their hopes, their dreams and their security.
It's the economy, stupid. It wins and loses elections.
The Prime Minister's sole focus needs to be the economy.
If he can't turn this around or halt the slide - National will likely lose the Treasury benches in 2014.