Last week's surprising report that the value of all the goods and services produced in America did not grow in the first quarter, which will be subject to two revisions as firmer data come in, tells us one of two things. Either the American economy has stopped growing, or the GDP figures, which have reported zero or nil first-quarter growth for the past thirty years, reflect flawed seasonal adjustments. Michael Gapen, chief U.S. economist at Barclay's, suspects the latter. And The Economist only half-wryly comments, "If only America could abolish the first quarter, its economy would look so much better." So last week's GDP report is not very helpful, taken alone. Nor is the reaction of the Federal Reserve Board's monetary policy committee. Chairwoman Janet Yellen recognised the weakness but put part of the blame on   the "transitory effects" of "transitory factors". Which is why we have to troll through a variety of other data to separate those transitory factors from the underlying trends in order to decide whether, like the British, we are experiencing a pause before resumption of growth, or an exhausted recovery.

There are reasons for pessimism. First, the news from the rest of the world is worrying.

• China is reporting that double-digit growth is a thing of the past, replaced by what the leadership claims is a 7% annual growth, which many experts believe is a considerable overstatement, and a property bust seems to be in the offing.
• Euroland remains in thrall to unreformed labour markets in several countries, a banking system yet to get a US-style restructuring, and growth running well below 2%.
• The Russian economy is hard hit by low oil prices and sanctions resulting from Vladimir Putin's efforts to reverse the WWII territorial settlement.   
• Brazil's economy is contracting, business confidence is plumbing record levels, and inflation is soaring.
• Growth in both Canada and Mexico, America's NAFTA partners, is likely to slow substantially as lower oil prices "drag on national performance" predict economists at Scotiabank.

This weakness in the economies of our trading partners explains a good part of the decline in first-quarter exports, a decline exaggerated by a "transitory factor" -- strikes at key West Coast ports that caused exports to stack up on docks and in warehouses. Result: 1.3 percentage points lopped off first-quarter growth by declining exports.

Then there is the news from corporate America. Its coffers remain stuffed with cash, but its purses remain zipped. Business spending on equipment and software fell in March for the seventh consecutive month. Business fixed investment (on machinery, buildings, and the like) contracted at an annualised rate of 23 percent in the first quarter, in part due to pull-backs by oil drillers, beset by low prices and an administration unwilling to allow them to export their surplus oil. "Businesses continue to show that they are unwilling to get aggressive about expanding their businesses in the current environment," comments Stephen Stanley, economist at Amherst Pierpont Securities.

A final worry comes from a surprising drop in consumer confidence, which had rebounded in March. In April, according to the Conference Board, its index gave back all of those gains and then some. Consumers turned gloomier about both their present economic circumstances and the outlook. "There is little to suggest that economic momentum will pick up in the months ahead," concludes Lynn Franco, Director of Economic Indicators at the Conference Board.

Perhaps, but only perhaps. For one thing, other measures of consumer confidence are pointing up, not down. For another, the housing market remains strong. Unconfident consumers don't buy houses, bidding up prices in the process. Yet that is exactly what is happening. Contract signings for purchases of previously owned homes, about 90 percent of all home sales, rose in March and were 11.1 percent up on last year's figure, while prices are up by about 5 percent. Economists at Goldman Sachs expect the good news to continue, "Robust growth in personal disposable income ... should ... contribute to rising demand for housing" concludes a recent client advisory.

Even more important, the job market seems to be improving sufficiently -- we will know more when the government releases its jobs report later this week -- to give wages a long-needed boost. We have already reported moves by Walmart, McDonald's and other large employers of lower-paid workers to raise wages as competition for workers heats up. Now auto workers might see their pay packets fatten. "It's our time," proclaims their union, the United Auto Workers, as it gears up for the first round of bargaining since the Big 3 US auto companies (Ford, General Motors, Chrysler) moved from bankruptcy to combined profits of almost $20 billion last year. The manufacturers will complain of rising competition from foreign companies, but will almost certainly have to concede increases exceeding the 1% the union squeezed from them in 2011.

Smaller companies are also under pressure. They report that unfilled job openings are at their highest level since before the 2008 financial crisis drove the unemployment rate to double digits. "Quit rates are up, and retention rates are down. That's when you see wages increasing," Mark Zandi, chief economist at Moody's Analytics, told the Wall Street Journal for an article it chose to headline, "Suddenly, a raise is just a job hop away."

All of this has resulted in an overall rise of 4.2% in employee compensation in the past year, positioning consumers, who account for about 70% of economic activity, to be a bit less tight with their cash than they have been. So far, the multibillion bonanza resulting from lower petrol prices has resulted in a jump in the savings rate, rather than a splurge on the malls. That parsimony seems to be over. The Lindsey Group believes that "the more important indication for forecasting is that the saving rate adjustment is complete." With consumers' balance sheets in better order, the consultants expect "consumption growth to ... provide a floor to real (inflation-adjusted) GDP growth of 2% during the year."

Wage growth, of course, has to come from somewhere. Most executives I talk to say that they have little room for more cost cutting, and that fierce competition and inventory overhangs make price increases difficult. That's bad news for corporate profits.