A year ago on this page, we cautioned that the enormous cost of the financial industry bail-outs and the stimulus plan would sharply curtail US President Barack Obama’s ability to push for investment spending and for healthcare and entitlement reform. We felt that by further exploding our federal debt and our reliance on foreign capital, our economic security would decline, especially vis-à-vis China.

Our remedy was simple: focus all energy on creating the 19m jobs needed for near-full employment. We were convinced that only a jobs-based strategy and a reinvigorated manufacturing sector could maintain living standards, enable us to continue to project leadership around the world and produce enough wealth to pay off our new debts and President George W. Bush’s $11,000bn debt legacy.

Well, we now need to create 21m jobs and any honest assessment would conclude that we still don’t have that jobs-based strategy. There are no long-term plans to support manufacturing and accelerate productivity growth, and we have not embedded in our stimulus efforts a commitment to healthy, well-educated and well-trained workers. We have also not yet taken the steps needed to correct misguided trade policies that have left American exporters confronting a legion of illegal subsidies, currency manipulation, and out-of-balance buy-domestic requirements and environmental standards.

Now there is the very real prospect that we will soon start to see “blowback”, which is what happens when you have not fixed the conditions that lead to a recession in the first place or substantially mitigated the economic hardships that result.

There is a danger of a second housing market collapse that could result in as many as half the nation’s homes being worth little more than their mortgages. (Already, 30 per cent of American homeowners have values less than their outstanding mortgages.) We are likely to see continued stagnation in new home and car sales and only moderate corporate spending and investment, even though this is vital for recovery.

We just had the worst economic growth decade (2000-2009) since the 1930s, with average growth in real gross domestic product of only 1.9 per cent a year compared with 3.9 per cent a year in the six previous decades. In terms of employment growth, it saw a decline of 0.8 per cent in the number of non-farm workers, compared with an average increase of 27 per cent in each of the six decades between 1940 and 1999.

There are several “canaries in the coalmine” that are also suffering. One of the most salient forward measures is the weekly report on diesel fuel receipts from commercial trucks travelling across the US, which correlates closely with the level of economic activity in the country. The most recent numbers showed a very sharp drop, much more than predicted. Others are the continued shortage of bank lending, mounting bank failures and municipal bond downgrades in every region.

There are a lot of things the administration and Congress could have been and should be doing to jump-start a sustainable economic recovery. But given how little has been done in the past year, right now they should focus on the two programmes that would most immediately create lots of jobs. First, we need investment in infrastructure and green technologies, provided the spending is coupled with buy-domestic requirements and (ideally) enabled by a new National Infrastructure Bank, which would create on average at least 25,000 new jobs for each $1bn invested. Second, we need employment programmes for the roughly 3m to 5m out-of-school youths who are unemployed, and for the 6.4m young people who will be graduating this summer from high school and college and trying to find work in this terrible economy.

And pretty obviously, given how quickly China has recovered economically and how it persists with unfair trade practices, we still desperately need to reform many of our trading policies and practices.