Concern is growing that the US is falling back into recession. Consumers are scared. The housing market is crippled, with prices still falling. Last week saw more disappointing figures on jobs and manufacturing. Friday’s closely watched payroll numbers were worse than expected. Analysts had predicted 175,000 new private sector jobs, which would have been low; there were 83,000. The unemployment rate rose to 9.1 per cent.

Within weeks, federal borrowing will collide with the statutory debt ceiling, raising the possibility of default; talks to prevent this are getting nowhere. The Federal Reserve’s second programme of quantitative easing, or QE2, is at an end. Higher commodity prices have caused a blip in inflation. All these factors should have lowered the price of US government debt, pushing long-term interest rates higher. But such is the concern about the flagging recovery that 10-year rates fell to less than 3 per cent last week, lower than they have been all year.

Even with a government that worked, remedial action would be hard to devise. Fiscal and monetary policy are both stretched, the options for more action limited and risky. But the very notion of optimal policy just now is Utopian because the US does not have a government that works. If it did, the clock would not be ticking down to a congressionally mandated default even as the economy stalls.