In the recent gabfest for central bankers in Jackson Hole, Wyoming the nabobs of monetary policy, and assorted talking heads, were at a loss to give much guidance on the direction in which we are heading. And, of course, there was much merriment among observers on how well the name of the venue, matched the sorry predicament of policymakers.

Uncertainty is high, regarding the outlook for growth, inflation and the resolution of the financial crisis. Most of the central bankers are in the dark, and still groping their way. In many cases their pronouncements are based on a good measure of hope rather than careful strategy. Of course, they have to keep up appearances and try to instill confidence among the various stakeholders who are affected by their policy decisions. What would you think of a bank governor who declares publicly that he is lost?

Former officials that are no longer in office are more honest. One such person is Yutaka Yamaguchi, previously deputy governor of the Bank of Japan. At the meeting, he stated that policy mistakes are easy to make in a period of "exceptional uncertainty"; and he is undoubtedly correct.

A felicitous outcome in balancing the risks to growth and inflation, while trying to keep the financial system afloat, is more likely to be a result of luck than design. The problem is complicated because there are lags in both monetary policy and inflation. According to a great deal of academic research, the length of the lags is not easy to determine.

Normally, bouts of inflation are not perfectly in synch with growth. Inflationary forces dissipate as the economy slows down, but it takes a good while for this to occur. As for monetary policy, it is well known that its main impact is felt with a considerable delay. When a central banker tries to micro-manage monetary policy he is implicitly making a forecast of the state of growth and inflation in the future, as well as the forward period in which the measures will start to bite.

For example, in anticipating the decline of inflation, say, five months hence, bankers may decide to ease monetary policy, now. Unfortunately, the impact of the policy measures may occur at a time when the economy is already rebounding. As a result, another bout of inflation may be fuelled further down the line.

At present, the general tendency of monetary policy at the global level is to emphasise the maintenance of growth, rather than the fight against inflation. Generally, this is the stance adopted by many of the major central banks; in the US, China and elsewhere. The European Central Bank is an exception, but expectations are that it will eventually be forced to change its strategy. Also, most policymakers in emerging Asian countries are reluctant to tighten monetary policy in order to fight inflation.

All are hoping that the current growth slowdown will be enough to remove inflationary pressures from the system. But if they are wrong and we need a deeper slowdown to correct imbalances and to eliminate the tenacity of those forces that generate inflation, we may end up experiencing policy-induced volatility in the future.

One of our favourite sayings is "Lies, damn lies and statistics". And there is no better illustration of its truth than the recently-released estimates of second-quarter US GDP growth. It was revised substantially higher, compared with the previous estimate.

The 3.3 percent annualised rate appears to negate observers' downbeat assessment of where the US economy is heading. But taking this data at face value is mistaken because it is contradicted by both monthly numbers and official estimates of gross domestic income (GDI).

Monthly data are not only timelier, in assessing of the state of the economy than quarterly data, but are also known to be better yardsticks of the change in economic activity than GDP growth. The message from production, sales, income and employment is that the economy continues to weaken.

As for gross domestic income, it showed a growth rate of only 1.9 percent in the second quarter. Interestingly, GDI was negative in both the fourth and first quarters, signalling recessionary conditions. The discrepancy between GDP and GDI was larger than normal, suggesting that there will be a significant revision of the statistics in the future.

Another notable thing about the data was the extent to which exports were the main drivers of growth. However, overseas markets are stumbling, which means that the US economy will have to rely on domestic demand rather than exports. Unfortunately, there are no signs of a turnaround in consumer and business spending. If you still believe in the accuracy of the GDP data ask the average Joe if it feels like 3.3 percent growth, but cover your ears to avoid hearing the expletive in his response.

Iraj Pouyandeh is a Strategist and Senior Portfolio Manager at LOM Asset Management. He manages the LOM Global Equity Fund. For more information on LOM Asset Management please visit www.lomam.com