The U.S. economy is slowing down and that could mean trouble for the rest of the world. The United States has acted as consumer of last resort for many of the world's exporters. As the U.S. economic expansion brakes, those countries will have to find other markets for their goods or risk a slowdown of their own. The burden falls on Japan and the European Union to do more to stimulate domestic demand. Failure to do so means that the world economy could face a hard landing next year.

A series of rate hikes by the U.S. Federal Reserve is having the intended effect. Although interest rates have not changed for six months, they are currently at 6.5 percent, the highest point in nine years. In a report released last week, the U.S. Commerce Department said gross domestic product expanded at an annual rate of 2.4 percent, its weakest pace in four years and a sharp decline from the 5.6 percent growth recorded in the second quarter and the 4.8 percent of the first. Although a slowdown was expected, the U.S. figures exceeded even the initial estimate of 2.7 percent that was made last month.

The impact is evident across the board. U.S. factories reported a 5.5 percent drop in demand for big-ticket manufactured items. Orders for durable goods fell for the time since July. Consumer confidence last month dropped to its lowest level in a year. Consumer spending rose in October by the smallest amount in six months and incomes fell for the first time in almost two years. It is hard to say whether the plunge in stock markets has been a cause or an effect of the slowdown. But one thing is certain: The Nasdaq index has lost 48 percent of its value since its record high in March, and consumers are uneasy.