The art of political leadership in hard times, someone once said, is to tell people the truth about how bad things are, but to do it in a way which gives them hope.

It is an extraordinarily difficult thing to pull off. Our last prime minister in hard times, Jim Bolger, never managed it. Nor did Geoffrey Palmer.

Nor, for all his rhetorical skills, did David Lange. By the time recession hit, in 1987, his main energies were focussed on his internal war with his finance minister.

It is the difficult art form John Key’s government is trying to pull off. So far it is not doing too badly.

In fact, it is probably doing it better than any government has managed for a very long time. You would have to go back before the life of this columnist and most readers – probably back to Michael Savage’s first Labour government, although that government had the advantage of coming in as the worst of the Great Depression was coming to an end.

But it is a task which is going to get harder as time goes on.

A theme Mr Key, and Finance Minister Bill English, return to time and time again is that New Zealand is better placed than most countries, and also that when the recession ends we will be in a particularly good position.

“That’s not just because I’m an optimistic sunny person or anything like that - although I think that is a useful thing to be," Mr Key told a Wellington Regional Chamber of Commerce breakfast this morning.

“Its because I think we have three major things going for us.”

Those three things are: one of the strongest banking sectors in the developed world; an economy which is based on producing quality food products – something the world needs; and effective interest rate cuts.

The last point is an interesting one. The cuts in the headline rate in New Zealand is broadly in line with what has happened in the United States – the rate has been slashed by a bit over 5% from what it was early last year.

But in New Zealand the cuts have not been passed on to borrowers. Not to the extent perhaps that borrowers would like – and some business groups have been vocal on this.

But banks globally have on average passed on about 3% of those reductions. In New Zealand the pass-on from those cuts has only been around 1%, Mr Key says.

That is certainly good news economically. Politically it probably makes little difference.

And Mr Key and Mr English are both right when they say New Zealand will probably do very well once the recession is over.

That, though is in the medium term, economically speaking.

What economists call medium term politicians call long term. It’s a major difference between the two disciplines.

The other difference is the recession – as defined by economists - will probably be over by the middle of the year.

But politically, a definition of a recession is whatever voters feel is a recession. That feeling usually linked to purchasing power and unemployment.

Employment is almost always the last economic factor to move. We were in a recession all of last year but unemployment didn’t start to rise until the end of the year.

The early 1990s recession technically ended in late 1991 – but the recession mood did not begin to lift until 1993 (and only just in time to save the Bolger government).

The other risk has – obliquely – been touched on by Mr Key in his speeches. When the world economy finally turns upward, the various stimulus policies around the world – especially President Barack Obama’s decision last week to print money – mean there will probably be an unusually strong inflationary surge.

That is going to hit consumer spending power. It is also going to mean our Reserve Bank will be hiking interest rates, possibly as sharply as it has been reducing them since June last year – which will further put the squeeze on household and business budgets.

“The easiest thing in a recession is to talk ourselves into a worse recession.” Mr Key said this morning.

He is right – and New Zealanders have a nasty habit, historically, of doing just that. Mr Key and Mr English’s rhetoric has had the express aim of avoiding that depressive tendency.

So far it is working – and it is certainly better than the alternative. But even sunny side up has its downside.