Americans spent less at retail businesses for a third straight month in June, the longest losing streak since the recession. Economists are downgrading their estimates of economic growth in the April-June quarter. When the government releases its first estimate on Friday, many think it won't even match the first quarter's sluggish 1.9 percent annual pace.
The global slowdown is squeezing U.S. exports, which have accounted for an unusually large 43 percent share of U.S. growth since the recession officially ended in June 2009.
Consumer confidence has fallen four straight months in the face of scant hiring and weak economic growth. U.S. companies are nervous about the threat of tax increases and spending cuts that are scheduled to kick in at year's end unless Congress breaks a deadlock. The IMF has warned of a spillover to the rest of the world if the U.S. economy falls off the so-called fiscal cliff.
Europe's obstacles are even more severe. It's faced with crushing government debts, struggling banks and scant economic growth. Unemployment in the 17 countries that use the euro is 11 percent, the highest since the euro was adopted in 1999.
Greece, Portugal, Italy and Spain are in recessions. Germany and France are faring better, but both are likely to grow more slowly this year than America.
French retail giant Carrefour SA — the Wal-Mart of Europe — says its sales fell in the second quarter amid a slowdown in its core markets in Europe.
Italy's Fiat lost nearly $260 million in Europe the first three months of the year. French carmaker PSA Peugeot-Citroen plans to slash 8,000 jobs in France and close a major factory. Europe's banks are stuck with bad real estate loans and shaky European government bonds.
The European Central Bank has made massive amounts of money available to Europe's banks at cheap rates to try to revive lending. But borrowing by many businesses and consumers remains weak because they are uncertain about future income.
Many fear that Greece and perhaps other countries will default on their debts and have to abandon the euro currency, which could ignite financial chaos across Europe.
A summit of European leaders last month produced some agreements that helped calm markets for a few days. But optimism faded as investors recognized that governments are still saddled with big debts and banks with bad loans. And that Europe itself still faces the threat that growth will stall and the euro currency alliance will collapse.
The European Commission predicts the 17-country eurozone economy will shrink 0.3 percent this year. Many economists fear it could be worse. Capital Economics says a recent drop in eurozone business confidence is consistent with a 1 percent decline in economic output.
In the latest wallop to the global economy, China said last week that its economic growth fell to a three-year low. The world's second-largest economy grew 7.6 percent in the April-June quarter compared with the same quarter last year. That was the slowest growth since early 2009.
Countries like China need fast growth to serve growing populations and millions of people leaving farms to seek work in cities.
Chinese growth has decelerated for eight straight quarters. That's the longest slowdown in records dating to 1992, according to Yu Bin, a government researcher.
The slowdown is partly deliberate. In 2010 and 2011, Chinese officials raised interest rates and took other steps to tame inflation and cool an overheated real estate market.
"Mission accomplished," says Cameron Peacock, a market analyst at Australia's IG Markets. "China now has the room to re-stimulate its economy."
But China is also feeling Europe's economic squeeze. Chinese exports to Italy dropped 24 percent in June from a year earlier. Exports to France fell 5 percent, those to Germany nearly 4 percent. Europe buys about 17 percent of China's exports.
The impact of weak European demand for Chinese-made furniture, shoes, toys and other goods has fallen hardest on export-oriented manufacturers along China's southeastern coast. Some companies have closed. Others are cutting staff.