The report World Economic Situation and Prospects 2008, states that the USA’s 2007 GDP growth rate of 2.2 percent will certainly decline by about 0.2 percent this year due to the combination of the housing crisis, energy prices and slumping consumer confidence. Japan another global economic pillar saw expansion of 2.1 percent in 2007 but is expected to see a slowdown in 2008. Western Europe which witnessed strong 2.6 percent GDP growth last year, could see a slowdown to about 1 percent this year. Uncertainty clouds the horizons.

Beyond the obvious there’s much good news and indeed impressive results which are generally not being seen. For example, “Defying global storms, German gross domestic product leapt by 1.5 percent in the first quarter, the fastest quarterly rate in 12 years,” according to the Financial Times. Likewise the French economy grew unexpectedly by 0.6 percent in the same period. “A dramatic German growth rate and better than expected economic performance from France, powered a eurozone rebound at the start of this year, in contrast to the sharp showdown in the U.S.” the paper adds. And don’t forget that with conservative and market-oriented governments, both Germany and France are rediscovering economic prosperity and trimming, if ever so slowly, the bloated social welfare state.

The World Economic Situation adds, that among new members of the European Union such as Poland, Slovakia and Slovenia performance last year “was robust with a growth average averaging 6 percent.” This year growth is only expected to slip by one percent.

East Asia without question is another star player with GDP growth in the region reaching an impressive 8.8 percent in 2007. This year will see a moderate slowdown given a deceleration of exports. Indeed the growth in world trade decreased 4.7 percent in early 2008, down from 7.2 percent last year due to weak import demand from the USA. The report adds, “as a result dynamic exporters of manufactured goods, such as China, reported significant deceleration of export volumes.” Nonetheless the trade boom in recent years has filled the coffers in mainland China where the official reserves reached a staggering $1.5 trillion by the end of 2007!

Conversely and dangerously on the global scene, food prices have jumped by 40 percent in 2007 will increase becoming in the words of the UN report, “a threat to the poor and to the prosperity and social stability of many developing countries.” Recent instability in Argentina, Egypt and the Philippines reflect the soaring food prices.

According to the UN Report, “Higher oil prices have induced bio-fuel production, increasing the prices of corn, soybeans and oil seeds.”

While the American economy has certainly seen a slowdown, it is not in a formal recession. Much of the economic problems have to do with dangerously high energy prices, which in my opinion, has done more to shock and jolt American consumer confidence and commerce than anything else. Add that to a bitter presidential election campaign where predicting “doom and gloom” is almost gleefully part of the Democrat Party’s package, and what you have is a deep psychological malaise of confidence reflecting more perceptions than actual economic fact.

Though I don’t for a minute think the slowdown is a passing Spring shower, I am equally convinced part of the problem lies in the fact that American consumers have talked themselves into a deep pessimistic funk from which it is hard to emerge unscathed.