The desire for good economic news has the government and sections of the business community clinging to any meagre drop of hope. But while for the moment the suggestion of extreme monetary policy looks to be receding, the economy remains extremely weak – as weak as it has been since the last recession in 1990.

Over the weekend came the news that the governor of the Reserve Bank, Philip Lowe, was mildly optimistic about the future. He noted in an IMF panel session that he believed the interest rate cuts were working and that it was “quite probable that we’ll see a return to trend growth over the next year”.

And while he could hardly say otherwise, on this news the expectations for further cuts were lowered, with a cut on Melbourne Cup day all but ruled out:

And yet the market still believes the RBA will cut the cash rate to 0.5% by April next year.

Just think about that – the head of the Reserve Bank suggests that after a soft period of growth things should improve next year, and yet investors still believe the cash rate will be cut to 1 and a half percentage points below the annual rate of inflation.

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Over the weekend also came news that the IMF – the same body that last week cut its outlook for growth this year to just 1.7% and for next year to 2.3% – broadly agreed with the government’s policy to let the tax cuts do the fiscal stimulus.

Jonathan Ostry, the IMF’s deputy director, Asia and Pacific, told reporters that “the current year’s budget with the personal income tax cuts ... is providing welcome fiscal support”.

That, however, was about as far as his praise went. He noted that “it is a tougher call for what next fiscal year’s budget should aim for” and that the government has made the trade-off between paying down debt and providing more fiscal support.

He also argued that “we would underscore, however, that in the event that there were further downward shocks to growth in the future, that fiscal policy would need to be part of the answer and to provide additional support, mainly on the spending side”.

It’s a very finely tuned response which – like the one given by Lowe – has as its core a desire not to scare the horses. Generally the IMF or the Reserve Bank saying they expect a recession or an economic downturn is a good way to make such a thing happen. So much better to suggest things should improve (with a few caveats).

But the reality is the economy already is in a major downturn, because most of the growth is coming from the non-market sectors of public administration, education and healthcare.

These are not strictly the public sector, because there are private schools and hospitals, but it is not a “market sector”, as prices of surgeries for example are not subject to haggling or even marked changes due to supply and demand.

At the moment the non-market sector is growing at 4.9% a year, while the market sector is achieving a piddling 0.8% growth:

That is the worst annual growth since March 1992 – when we were still in the midst of the 1990s recession.

The bigger problem is that this poor performance in the market sector is widespread, with the mining sector the only real strong performer.

But the mining sector, with its shift towards exports, no longer has the impact on jobs and wages that it did during the early 2000s mining boom. If we exclude mining, the market sector is performing even worse – growing at just 0.3% – and worse than occurred during the GFC:

Any time you have to go back to the 1990s recession to find a worse performance, you are not talking about a strong economy.

But just how bad things are is highlighted when we look at how much the market sector is contributing to economic growth.

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Given the market sector is roughly 82% of the economy, you would expect it to contribute around 80% of the growth in the economy every year. And yet over the past year, the non-market sector actually contributed more to economic growth than did the market sector.

The market sector only accounted for 44% of the growth in the economy, and when we exclude mining, that number falls to just 15%:

Numbers that low over the past 30 years have been consistent with periods of very weak economic growth – and they were all periods in which the government ran budget deficits to help provide growth to the economy.

But for now the government waits, hoping its tax cuts will increase household consumption, and hoping the rate cuts will do enough to spur investment.

• Greg Jericho writes on economics for Guardian Australia