The World Is Watching

Global economic growth will slow to 3.7 percent this year from 4.1 percent, according to the International Monetary Fund. The odds of a global recession—not just an American one—are now 1 in 4, according to an account of the IMF report from Bloomberg.

Treasury Secretary Hank Paulson may not agree (he called the analysis "overblown"), but it's worth noting that while American investors zeroed in on the ailing financial sector at home in recent months, popular markets overseas have fallen hard. Hong Kong's Hang Seng index has lost more than a third of its value compared with its 52-week high. The Korea Composite is off almost 20 percent. Britain's FTSE 100 is off 14 percent, and Japan's Nikkei 225 has plummeted almost 39 percent.

The report is unsettling for America's economy because a global slowdown would very likely remove yet another pillar of support for the U.S. economy. Export growth sustained the economy in the fourth quarter, adding an extra percentage point to GDP growth at a time when both imports and domestic spending look anemic.