The cracks are starting to appear. At least here.

While America’s economy continues to defy the odds, with stronger-than-anticipated inflation, employment and spending, Australia’s economy is labouring under the growing weight of the past two years of rate hikes.

Even though the Fed has hiked rates more than the Reserve Bank, the effect on mortgage interest rates here has been dramatically higher.

That’s now raising the prospect that we may end up cutting rates before the United States, an outcome that would place the Aussie dollar under even more pressure.

It is bang on 64 US cents this morning, and threatening to break even lower. 

The latest piece of the domestic economic jigsaw puzzle shows a stark rise in business failures, which have risen to record highs, hit by a triple blow of weak consumer demand, cost pressures and a tax office now determined to collect what it’s owed.

According to data from debt monitoring firm CreditorWatch, more Australian businesses are now in the hands of external administrators than ever before, rising more than 22 per cent since this time last year.

The pain is coming from all sides.

Construction firms are reeling from a crackdown by the Australian Tax Office, registering the most tax defaults, while also still facing rising building material costs and skilled labour shortages.