The IMF's World Economic Outlook, released in full last week, provides an alternate interpretation. It sees the global economy as fundamentally robust, with a broadening of its drivers beyond the North American and Pacific Rim regions. There is a chapter on "decoupling the train," in which the traditional "U.S. sneezes and the rest of the world catches a cold" perspective is covered, with the tentative conclusion that the U.S. slowdown is unlikely to spread.

But we may be coming to the end of the era in which supranational organizations start any analysis with the U.S. as uniquely and inevitably the prime mover. Instead of the world catching a cold this time, it may be the U.S. economy that catches a draft, in the Nascar sense of that term, from global momentum.

Been Down So Long That Up Is Always a Surprise

With a 4.4% unemployment rate and core consumer prices well above 2%, the case for a Fed ease, on anything other than a pre-emptive basis, is not easy to make. When you factor in the recent shrinkage in our trade deficit and the likelihood, as inferred from the IMF's outlook, that demand for U.S. exports will facilitate increased production runs in an already fully employed domestic economy, it is not easy to understand why fed funds futures don't tilt toward tightenings yet to come.

U.S. Economy: Tracking Like a Mid-Cycle Pause

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Source: International Monetary Fund World Economic Outlook: "Spillovers and Cycles in the Global Economy," April 2007. Chapter 2. Country and Regional Perspectives. Retrieved 13 April 2007 from http://www.imf.org/external/pubs/ft/weo/2007/01/pdf/c2.pdf The World Economic Outlook presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.