After worrying about Europe for several months, economists are now turning their focus back to the United States, where high unemployment and a historic housing slump just won't go away.
The U.S. economy appears mired in a troubling limbo, not weak enough to signal an imminent downturn and not sufficiently sturdy to give businesses confidence to begin hiring again.
The latest economic data highlights the shifting fortunes on either side of the Atlantic, with a robust Germany propelling the eurozone as the U.S. outlook looks bleaker.
A sharp widening in the U.S. trade deficit has forced economists to revise down estimates for second-quarter growth, indicating the slowdown has come even more quickly than pessimists expected.
It's somewhat ironic but significant that the U.S. slowdown appears to have been triggered by debt concerns in Europe and in the end European growth is showing a pick-up, said Jim O'Sullivan, chief economist at MF Global in New York.
The question we're left with now is, 'Did this turmoil just set back or really short-circuit the recovery?'
Answers were not forthcoming, but data over the coming week should help steer forecasters in the right direction.
Among key releases are industrial production for July and, even more timely, the Philadelphia Fed's survey of regional manufacturing activity. Both are expected to show further firming, with output for U.S. industry projected to have climbed about 0.5 percent.
Ground-breaking on new homes, which after a four-year slump is now at under a quarter of its boom-time peak, likely stabilized at around a 560,000 unit annual rate after some see-sawing related to the expiration of housing tax credits.
Steadfast weakness in housing, along with a stubbornly high unemployment rate of 9.5 percent, were some of the factors that last week led the U.S. Federal Reserve to try to offer even more monetary stimulus to the economy.
The Fed said it will funnel cash from maturing mortgage-backed securities it acquired during the financial crisis into further purchases of Treasury bonds in an effort to keep long-term rates low and spur more lending.
The U.S. central bank's policy has inadvertently created headaches for the Japanese government, which is trying to figure out what to do about an ever strengthening yen that threatens to derail the country's already-meek recovery.
Japanese Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa may meet as early as next week to discuss the matter, though policy options are seen as limited.
ONE CURRENCY, TWO SPEEDS
Even Europe's improving fate is not without its caveats. The countries at the center of the debt worries that generated global market turbulence in the spring, like Greece, Ireland and Spain, all fared pretty dismally in the second quarter.
This puts even more pressure on Germany to maintain a growth rate strong enough to pull other eurozone members along. On Tuesday, investors will get a look at the ZEW economic sentiment survey, which took a steep dive as the European crisis heated up. It is expected to hold just about steady at a respectable reading of 21.
But Germany is simply not large enough to go it alone. Without a healthy U.S. expansion, say analysts, Europe's prospects would likely sour as well.
In the United States, few indicators are as important as jobs. Unfortunately, weekly applications for unemployment benefits spiked again last week to 484,000, the highest level in nearly six months.
This and other red flags have prompted Goldman Sachs economists, among the more bearish on Wall Street, to predict a 25-30 percent chance of a much-feared double-dip recession.
Any hint that they are right could trigger further action from the Fed, which signaled with last week's move that it would not sit idly by as the economy loses momentum.
Further clarity on the outlook for monetary policy could come from a pair of Fed speeches this week, particularly remarks on Thursday by St. Louis Fed President James Bullard.
Bullard made waves late last month when he presented a paper to reporters arguing that the United States was at risk of Japanese-style deflation and that the Fed's commitment to keeping interest rates very low for an extended period might boost, rather than lower, that threat.
(Reporting by Pedro Nicolaci da Costa; Editing by Dan Grebler)