This shouldn't come as a surprise, since the leading indicators of all the main economies, from the United States to Europe, Japan to China, have been turning down for some time.

And it will probably get worse, because the huge stimulus packages unleashed by governments are running out and most countries are worried by rising their debt and reining in government spending. Cutbacks of $500 billion are coming over the next two years in the European Union alone.

There isn't much hope on the horizon and some black clouds that could make matters worse. The first is that the sovereign debt crisis in Europe is far from over. Greece and Ireland remain in parlous condition and Europe's banks face savage losses if strikes or riots weaken the political will of the Greek and Irish governments to ride out the storm.

The second black cloud is the unhappy political mood in the United States and the growing clamor for some protectionist measures against China. They may well be warranted. China is behaving in a selfish and mercantilist way, trying to tilt the playing field to help its own companies and hinder the foreigners.

Most countries do this at similar, early stages of economic development, but China is an easy political target. The problem is that China has a number of alarming ways to retaliate, from using its vast nest egg of $2.5 trillion to disrupt currency markets to more geopolitical measures in the South China Sea. And China is now so important to developing countries in Asia, Africa and Latin America that any Western attempt to punish China could build a storm of protest and protectionist retaliation that would recall the 1930s.

The third black cloud is that the housing market in the United States is turning sour again, with 23 percent of homeowners -- 11 million homes -- owing more than their houses are worth. Douglas Duncan, chief economist for the government-backed Federal National Mortgage Association -- Fannie Mae -- says there is a huge amount of unsold inventory keeping prices down, with 7 million U.S. homes are vacant or in the foreclosure process. Morgan Stanley says it's more like 8 million.

The fourth black cloud is that this was a different kind of recession, not started by central banks raising interest rates to rein in an overheated economy but one that came from a financial crash.

There is a lot of research, most recently from Prakash Kannan at the International Monetary Fund, that says recovery from such recessions tends to be slow and prolonged. After analyzing more than 80 recessions in different countries over the last 40 years, he found that after conventional slowdowns growth bounced back at an average 3.7 percent over the next two years. But growth recovered at a much slower 2.4 percent after the 13 recessions triggered by financial crises.

The latest OECD report bears this out, suggesting that in the Group of Seven developed countries growth looks likely slowing to an anemic 1.5 percent in the second half of this year. "Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated," it said.

How slow is slow? The OECD see growth in the United States of 2 percent in the third quarter this year and 1.2 percent in the fourth. Japan should experience growth of 0.6 percent in the third quarter and 0.7 percent in the fourth. For Germany, France and Italy, the comparable figures are 0.4 percent in the third quarter and 0.6 percent in the fourth.

This is still growth, so it isn't technically a recession, although it is too weak to reduce unemployment or boost tax revenues to help governments out of their budget deficits. So it is starting to look as though this slowdown has another few years to go and that the American consumer in particular, after paying down debt and worrying about house values, may not return to the traditional free-spending ways until after 2012. There may also be a psychological impact, so evident in that generation that suffered the Great Depression, that leads people to avoid debt and shopaholic consumption for a very long time.

Serious economists are worried. Princeton Professor Paul Krugman, a Nobel laureate, warned this summer: "I fear we are in the early stages of a Third Depression. It will probably look more like the Long Depression (after 1873) than the much more severe Great Depression (of the 1930s). But the cost -- to the world economy and, above all, to the millions of lives blighted by the absence of jobs -- will nonetheless be immense. This one is primarily a failure of policy."

Professor Michael Pettis of Peking University's School of Management, and one of the real experts on the Chinese economy, put it another way: "This is the Big One, not a short-term liquidity crisis like LTCM, the Asian Crisis, or the Mexican crisis of 1994. I think this is likely to be one of those big events, one that represents a major readjustment in the world during which time the massive imbalances that had been built up during the long globalization cycle that started around the late 1980s and early 1990s are finally worked out. Not only will Greece, in other words, get worse, but it is by no means the end of the crisis. A lot more countries in Southern Europe, Latin America and Asia are going to be caught up in this before it ends."

That probably underestimates the growth in demand we can expect to come from the emergent market economies, which may be growing more slowly but they are still growing much faster than the G7.

We are already getting close to the moment when the G7 countries will account for less than half of global output. And the irony is that the G7 countries will recover faster, the sooner that historic shift of economic power takes place.

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