At last year’s confabulation of central bankers in Jackson Hole, Wyoming, the view that the US Federal Reserve should cut interest rates by 100 basis points was thought a bit extreme; 325 basis points of cuts and the Bear Stearns crisis later, we have learnt to take the credit squeeze seriously. But what has been remarkable at this year’s Jackson Hole symposium is that the effect of the financial crisis on the real economy is still so unclear.

A year’s turmoil in the financial sector – most recently the travails of the government-sponsored mortgage lenders, Fannie Mae and Freddie Mac – means that credit is more expensive and harder to come by. Thus far, however, US growth has slowed rather than crashed and, because the health of the banking sector and the health of the economy feed on each other, both a recovery and a dip into recession are still plausible scenarios.