Here is the reality. We have intense uncertainty on US fiscal, energy and health policies. Nobody knows what their effective tax rate is going to be next year so they cannot plan. When you model that uncertainty in economic terms, you end up with higher liquidity ratios in business and rising savings rates in the personal sector. This damps spending growth and spending is what gross domestic product is all about.

On top of that, we have an export shock from the spreading European recession that is only now starting to show through in the data, such as the plunge in US purchasing managers’ orders. Now, if the baseline growth trend in the US economy was in the old paradigm range of 4-6 per cent for this stage of the cycle, we could certainly absorb these negative shocks. But the underlying trend in the pace of economic activity is somewhere between 1 and 2 per cent, so there is little margin for error: the cushion is razor-thin.

After almost four years of $1tn-plus fiscal deficits, near-zero policy rates, and a Fed balance sheet that is pregnant with triplets, how can we not have some growth, any growth? The government spigots have been turned on to such an extent that if this were a normal plain-vanilla cycle, the economy would have ballooned at an 8 per cent average annual rate since the “great recession” ended three years ago.