BRUSSELS - The two best performers among the Group of Seven economies in the third quarter almost certainly took separate paths in the fourth, as Britain suffered a Brexit reality check, while the United States sailed on despite the trade war it has sparked.
The world's largest economy is expected to have grown by an annualised 2.6 percent in the final three months of 2018. Even if that is down from the 3.4 percent of the third quarter, it is still a healthy clip.
A first estimate should have been released by now, but the U.S. Bureau of Economic Analysis said on Thursday the release had been pushed back to Feb. 28 due to the government shutdown.
Forecasts though equate to a quarterly 0.6 percent, triple the growth rate of the euro zone in the same period. Growth in China, while far higher, cooled to a 28-year low in 2018. Japan, the world's third largest economy has yo-yoed between contraction and expansion throughout the year, with a 0.4 percent growth reading seen for Thursday.
Harm Bandholz, chief U.S. economist at UniCredit, says that despite unstable politics in Washington, two factors explain why the U.S. economy is one of very few holding up well in recent months - massive stimulus mainly from tax cuts and the fact that it is relatively closed and not dependent on foreign trade.
In the very short term, the government shutdown, which could resume next Friday, and the polar vortex of late January could rein in first quarter expansion.
Longer term though, even the Federal Reserve has become more hesitant, signalling last month at least a pause to its monetary policy tightening due to a cloudier outlook and growing risks.
The labour market is still glowing, but the impact of tax cuts will fade and the nation will hit a debt ceiling in March, which could ultimately lead to a debt default.
UniCredit's Bandholz says slower growth could expose the very high debt of corporates, weakening investment spending and possibly spilling over into other parts of the economy.
"All these factors combined will be enough to push the U.S. economy into a mild recession in 2020," he said.
For now, U.S. strength in the face of economic slowdowns elsewhere may well be helping President Donald Trump's trade push.
Trump said on Thursday he did not plan to meet Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal.
Other countries, notably Germany, are awaiting a Commerce Department report due Feb. 17 on whether auto imports are security risk. Bank of America Merrill Lynch wrote on Friday that this should not in the end lead to tariffs, although believes "some brinkmanship" is likely.
HOT SUMMER, COLD BREXIT WINTER
Across the Atlantic, Britain enjoyed its fastest economic upturn since late 2016 during the third quarter, spurred by a surge in consumer spending over an exceptionally hot summer and England's surprise passage to the semi-final of the soccer World Cup.
However, fourth quarter growth is seen at only half that 0.6 percent rate.
The Bank of England said on Thursday Britain faces its weakest economic growth in a decade this year as "the fog of Brexit" causes tension and the global economy slows.
It follows Tuesday's release of the IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI), which fell to its lowest since July 2016, showing the world's fifth largest economy stalling or contracting, with firms in services reporting jobs cuts for the first time in six years.
James Smith, economist at ING in London, said the British economy should normally mirror what was happening in the United States, partly because of its greater services base, but that had not been the case in 2018.
"Sure, there's a bit of a global element and on the manufacturing side, the fact that euro zone demand has slowed has had an impact, but really Brexit is the main story here," he said.
British Prime Minister Theresa May is due to report back to the UK parliament next week after securing at least a pledge of renewed talks from a day trip to Brussels.
Parliament will then hold a debate on Thursday, which could see attempts to shift control of the process away from government and give parliament a chance to define Brexit.
For the euro zone, the initial estimate on growth is already out, but the German figure is only due on Thursday, when data is expected to show Europe's largest economy narrowly avoided a technical recession by eking out 0.1 percent growth in Q4.
Euro zone industrial production figures due the day before, on Wednesday, will also be watched closely by markets keen to know the depth of the region's decline.