Fresh economic figures from Europe and China added to mounting concerns that weakening growth at the end of 2018 will carry over into a sharper slowdown next year

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Relatively steady U.S. economic numbers—including a robust report on consumer spending from the Commerce Department—haven’t calmed the markets. Maurice Obstfeld, the retiring chief economist of the International Monetary Fund, said earlier this month the U.S. will likely feel a drag from the global downdraft.

“For the rest of the world there seems to be some air coming out of the balloon and that, I think, will come back and also affect the U.S.,” he said.

The divergence between the U.S. and much of the rest of the world has become increasingly pronounced in recent months. Other reports on the U.S. economy showed worker pay rose a sturdy 2.9% in the third quarter, and November was a strong month for industrial production, driven by heavy use of utilities due to cold weather.

Analysts marked up their forecasts for the U.S. economy. The Atlanta Fed’s closely watched GDPNow, a real-time growth tracker, upgraded its estimate for fourth-quarter growth in gross domestic product, up to a 3% annual rate from its previous estimate of 2.4%. Macroeconomic Advisers revised its estimate up to 2.6% from a 2.1% pace.

U.S. stocks, however, slumped. The Dow jones Industrial Average was off 516 points, or 2.1%, among the steepest drops this month, while the S&P 500 was down 1.6%. President Trump has embraced the divergence between the U.S. and the rest of the world, especially China.

“China just announced that their economy is growing much slower than anticipated because of our Trade War with them,” he said on Twitter Friday. “U.S. is doing very well. China wants to make a big and very comprehensive deal. It could happen, and rather soon!”

The U.S. economy, the world’s largest, is widely forecast to slow for a variety of reasons, including rising interest rates, the waning effects of recent tax cuts and a fading surge of federal spending.

U.S. exports have slumped since May, while U.S. imports have continued to climb. The industrial production report also showed that U.S. manufacturing sputtered at the end of the year, with factory output flat in November after declining in October.

U.S. economic growth exceeded a 3.5% annual rate in both the second and third quarters this year, according to the Commerce Department. The IMF projects 2.5% next year.

In China, numbers showed that the country’s economic downturn deepened last month, hitting industry and consumers and raising the challenge for Beijing to stabilize the growth path while fending off the trade conflict with Washington.

In Europe, Italy is hovering on the brink of recession, Germany is struggling to rebound from a third-quarter contraction, and monthlong antigovernment protests in France led to the first decline in business activity there in 2½ years.

The world’s weakness is not a disaster for the U.S., said Jay Bryson, global economist of Wells Fargo Securities. “Is it enough to put you in recession?” he said. “No. But if the car was driving at 70 miles per hour, this gets you down to 55, and nobody likes to drive at 55 miles per hour anymore.”

The forces that would lead to a sharp rebound for U.S. manufacturers and exporters is hard to see. In China, industrial production, weighed down by woes in the car and property markets, slowed in November to its slackest point since early 2016, official data showed. Growth in retail sales dropped to its lowest level in more than 15 years.

Economists had expected things to be slightly better last month due to government efforts to support growth by cutting taxes and jump-starting infrastructure projects. Investment did grow a tick higher.

“A downward cycle hasn’t finished yet, and we’ll probably see more weakness in the first half of the year,” said Shuang Ding, an economist at Standard Chartered. He said sluggish demand likely caused factories to curb production.

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