By Ambrose Evans-Pritchard
The US economy has slowed to stall speed: successive quarters of 5pc growth, 2.7pc, and 1.6pc (to be revised down), the worst recovery of the post-war era. Such is the crush of debt.
While last week's data was less bad than feared, it was still awful. Manufacturing orders fell to the lowest in 15 months. Some 54,000 jobs were lost in August and the broad U6 gauge of unemployment rose from 16.5pc to 16.7pc. The US needs to create 150,000 a month just to stay even. The social depression is getting worse, not better.
Hardline bears think growth will drop below to 1pc in the second half as the inventory boost wears off and the tail winds of stimulus turn to headwinds, leaving no margin for error.
Soft bears such as Bank of America's Ethan Harris said the economy will limp along just shy of a double-dip. "Our sense is that the 'growth recession' is already here and it is likely to linger through the first half of next year," he said. His reason for concluding that it will not be worse is telling: the Fed will step in with $500bn to $750bn of fresh QE every six months if necessary.
Perhaps, but perhaps not. The luminaries are lining up to say there is very little that the Fed can do after already cutting rates to zero and purchasing $1.7 trillion of bonds. "The heavy artillery has already been fired," said former Fed vice-chair Alan Blinder.
"I really don't think there is a lot the Fed can do," said Harvard's Martin Feldstein.
"The benefits of additional QE are quite small," said Stanford's John Taylor, of the Taylor rule.
"The US has run out of bullets. More QE is not going to make any difference," said Nouriel Roubini, our Dr Gloom.