Out and about last week I was accused by an acquaintance of being too gloomy about the economic future. Okay, there's been a bit of pain this year (a bit - he obviously hadn't invested in technology stocks) but people will get over it, he told me. Earnings will rise again. And, long-term, everything will be fine.

I am, of course, a believer in taking the long-term view and, as far as the Fed is concerned, I doubt that it could have handled things any differently but most people's long-term planning depends on how they feel in the short term too.

And I do think that short-term, in the US and here, things are getting stickier. It's always a bit worrying when the banks start to cut back on their earnings forecasts and the news from the US in that respect is not especially uplifting.

Almost all US investment banks have cut back on forecasts and many are laying off staff. Merrill Lynch, Goldman Sachs and Morgan Stanley all reported much lower earnings for the second quarter and all of them have been hit by falls in IPO and merger and acquisition activity.

Merrill Lynch's warning that profits for the quarter could be halved was particularly painful since analysts seemed to have expected better things from it.

Mind you, the analysts may have been over-optimistic about the bank in the first place given that it generates a lot of earnings through equity income, and the words "equity" and "income" are not exactly going hand-in-hand right now.

Bear Stearns decided to cut 400 jobs to reduce costs - most of the people that were let go were in the IT department ( it cut jobs there in December too but obviously not enough). Merrill Lynch also slashed jobs and got rid of more than 3,000 staff. Goldman's hasn't yet laid off anybody but it has transferred people from the exglamour technology, media and telecoms sectors to areas such as energy, which is doing well thanks to George W.

For banks whose main activities are not quite so directly related to equity business, the second quarter was less harrowing. Lehman Brothers actually announced a 14 per cent increase in earnings because its income came from debt trading and underwriting. Good news for all my friends in bonds who were regarded as second-class citizens while the buzz was equity trading.

Nevertheless, downgrades and staff-culling on Wall Street definitely point to an economy that is still struggling. Global mergers and acquisitions are down 55 per cent in the first half of the year and investment banks are overstaffed.

The Fed has done its best with cuts of 275 basis points but it'll still take time before those cuts have a lasting effect. Many investors were disappointed with the latest 25 basis points, feeling that Al & Co should've gone the whole hog and done another 50 but, quite honestly, what would be the point? It's purely cosmetic right now anyway. Up to the day before the Fed's meeting I was still seeing commentary that insisted 50 basis points was the only way to go because unemployment is growing, industrial production is falling and it's going to be two months until the next meeting.

They can't seriously believe that an extra quarter-point will make that much difference now.

Although economists and market commentators tell us to take the long-term view they still want to see results straight away and the problem is that we haven't seen any lasting results from the Fed's cuts yet. At the start of the year, when the ratecutting programme had begun, people expected an almost immediate impact.

Six months is probably the minimum amount of time it takes for rate cuts to feed into the market and, given that the first cut was only the start of Greenspan's hacking of rates, it's not entirely unexpected that we haven't seen an upturn yet.

At the time he started the cuts we'd barely begun the downturn. But all those people who thought that it might be a quiet first half of a year and a livelier second half are now getting more and more worried because the economy has yet to respond, and "lively" might not be the way to describe the second half after all.

If things were as bad as we thought in January, it'll take more time. After all, businesses were very heavy on inventory back then and nobody was ploughing more money back into those businesses when they were assured that the outlook was grim. By now, though, most of that excess should be drying up and businesses will have to look at reinvesting again. (Unless, of course, they're of the dotcom variety in which case reinvestment is just a word in the dictionary.) But we won't see the effects of that immediately either.

Nevertheless, forecasters are now suggesting the last quarter as being the one where we see salvation. And this is where I'm probably in the gloomy department because I think it'll take longer than that. When you've had a decade of unparalleled growth, even a year is a short timespan for a correction. So that's why I'm not jumping on the party bandwagon for the US just yet and why I think we've still some pain to take at home.

Back in January, I reckoned it would take some time before the fallout from the US would be felt here. This is that time. According to the latest NCB Purchasing Managers' Index, the volume of export orders in manufacturing has fallen, although the Irish economy has expanded marginally. But new orders are weak and the stock run-down in June was at the fastest rate since the survey began. Industry might still be supported by domestic demand but falling overseas orders will have an impact on us sooner or later.

Even the happy-clappy world of the estate agent has changed in the past two weeks. They've finally admitted (cheerfully because they say it's a good thing) that the top end of the market is coming under pressure. In a bit of empirical evidence on the market generally, I met two people who've pulled out of midmarket house purchases last month. But we'll know that it's really turned when people stop paying nearly £300,000 for two-roomed cottages in Dublin 4.

You can talk about location, location, location all you like but, if you're living anywhere for any length of time, you need a bit of space too. I once rented a flat there and it was, of course, very convenient but I couldn't hack having to be tidy all the time because of the complete absence of storage space. Those bijou residences may yet become the dotcoms of the property market.

Still, who knows? It's the summer, traditionally a quiet time for markets.

I don't mind if I've got it all wrong and, in September, equity prices soar, manufacturers rush to complete orders and Greenspan's final cut does the trick. But I'm not actually betting on it just yet.