BARACK OBAMA will be a two-term president. Even if he accomplishes very little of legislative note during his second term, his re-election secures the major achievements of the first term and ensures that health-care reform, for example, will be implemented and become part of the framework of the country's safety net. If the potential for new initiatives looks a bit limited, Mr Obama must nonetheless be glad that his second term will start under better conditions than the first. In November of 2008, when the president was securing his victory over John McCain, the American economy lost over 800,000 jobs. American employment is now growing, by contrast. Banks are lending again, households have deleveraged, home prices have stabilised and begun rising, and state and local governments are mostly done slashing budgets and payrolls to close revenue gaps. The hardest bit of the post-crisis period seems to have been passed, leaving some analysts to venture that a sturdier recovery is developing. Mr Obama might well govern over the next four years with a strong economic wind at his back.

I certainly believe the possibility for that is there. But the Obama administration should be wary of economic complacency. It is a long way from being out of the woods.

The problem is that America remains at the zero lower bound: the Federal Reserve's policy rate is effectively zero, meaning that it can no longer cut rates to buoy the economy. The Fed has used unconventional policy to provide stimulus despite this handicap, but it is clearly less comfortable using forward guidance and asset purchases than straightforward changes in the federal funds rate target. The bar to action is higher, the costs are greater, and the accommodation of economic weakness is less complete.

This limitation is responsible for some of the weakness of the American recovery. It also suggests that the multiplier on government cuts is likely to be higher than normal; a 1% reduction in government spending might well translate into a 1% reduction in output or more. And it means that America could be in serious trouble if it falls into recession. There is a risk that it will get stuck at the zero lower bound, much as Japan has. That could lead to years of disappointing growth and could be very bad for American finances.

To avoid this fate, America's economy needs to grow fast enough for long enough to push nominal interest rates up, and it needs to do so soon enough and thoroughly enough to give the central bank room to cut rates in response to the next recession without reducing them all the way back to zero. The economy is looking healthier, but it hardly seems to be on the brink of sustained, fast growth sufficient to accomplish that kind of a rise in rates.

This dynamic makes the looming and inevitable turn toward deficit reduction particularly fraught. Reducing the deficit in order to stabilise the country's debt load is a reasonable aspiration. In the short run, however, it is risky. The global economy remains shaky, and many of America's largest trading partners are trying to raise their net exports. External demand will not be providing much help to the American economy over the next couple of years. Households are looking heathier financially than they have in some time, and residential investment seems to be ready to carry more of the weight of recovery. Still those factors would be hard-pressed to power a strong recovery amid a neutral fiscal policy. If fiscal policy is an out-and-out drag, the timeframe for exiting the zero lower bound is likely to stretch out to the next recession and beyond.

Deficit reduction must therefore be handled very carefully. Ideally, the pace of consolidation would be leisurely—an immediate 4%-of-GDP shift in fiscal stance is not a good idea. Ideally, it would focus heavily on reducing the rate of growth of long-run drivers of spending, especially health care, but also defence. Ideally, it would pay careful attention to relative multipliers in order to improve the overall growth effect of the cuts. A policy package that raised high-income tax rates, yielding $700 billion over ten years, and invested in needed infrastructure to the tune of $500 billion over ten years would reduce projected ten-year deficits while possibly having a net positive impact on short-run growth. Ideally, it would come packaged with other helpful policies, like a still-more aggressive monetary stimulus, tax-code reform, and an immigration reform that made it much easier for people to move to America.

The trouble is that deficit-reduction will not be a study of the economically ideal. It will be a study in political necessity. If the only way to protect the American economy against a massive dose of cuts is to make sure that what cuts do occur hit budget items with relatively high multipliers—and the government's notorious habit of squeezing "non-defence discretionary spending" until the pips squeak suggests this is a real possibility—then the resulting policy will be anything but tailored to minimise the damage to the American economy.

And again, "damage" may not read, in the very short term, as anything all that serious. If some cuts fall and growth slows in the first half of 2013 but stays positive, many will argue that the American economy has dodged a bullet. But it will have done so by prolonging the period over which the economy remains stuck at the zero lower bound, effectively dodging the bullet by jumping sideways into quicksand.

The American economy is healthier than it has been in at least a half decade, but it remains very vulnerable. Mr Obama must be careful not to take the strengthening recovery for granted, or a part of his historical legacy will be a failure to pilot the American economy out of the treacherous shoals of the zero lower bound.

Post-script: It is unfair to put the blame or responsibility for this on Mr Obama. It is almost certainly within the Fed's power to navigate the economy away from the zero lower bound even with a not-too-careful fiscal policy (though not, most likely, amid a truly disastrous fiscal policy). The Fed could promise to temporarily target a higher rate of inflation—perhaps 3% or 4%—or to return the economy close to the pre-crisis trend in nominal output. Given that the Fed is reacting less to economic weakness than it might if rates weren't stuck near zero, Mr Obama must tread very carefully in managing economic and fiscal issues.