In the second half of 2011, the US economy appeared to buck the impact of the eurozone crisis, with American economic data surprising on the strong side in the final quarter of the year. But, as the new year begins, it seems improbable that economic activity in the US and the eurozone can remain so divergent for much longer.

Will the weakness in the eurozone eventually bring the US economy to its knees? Or will the greater resilience of the US win the day? The answer to these questions will determine whether the global economy will experience a double-dip recession in 2012.

The data released over the holiday period seem to be pointing in a more optimistic direction than markets have recognised. A year of above-trend growth certainly looks like a stretch in the present environment of fiscal tightening and global deleveraging. But the risks of a global double-dip recession appear to be receding, at least for now.

It is never easy for economists to identify major turning points in the global economic cycle as they are happening in real time. Economic data at these stages of the cycle are inevitably noisy, and it is easy to miss major inflection points, even several months in arrears. Yet active investors have little choice but to attempt to take a view on this critical matter. By the time that economic data have clearly confirmed a turning point in global activity, asset prices will already have fully discounted the news.

One way of trying to handle this difficulty is to examine monthly changes in global leading indicators, including business surveys. Regular readers of this blog will know that this method does not always work by any means, but it does often highlight interesting information which should not be ignored. As the first graph shows, these real-time data have traced out a clear turning point in global activity since the middle of last year:

David Fuller's view I think the Eurozone's crisis has definitely been a drag on the US economy but the effect has been cushioned somewhat by stronger growth from Asia, albeit at a slower rate than in 2010. Many S&P 500 companies will tell you that much of their earnings growth last year came from the growth economies overseas.

I also maintain that the oil spike (weekly & daily) in the first four months of 2011 was a 'game changer' for the global economy. Looking to the future, additional spikes in energy prices will continue to be headwinds for GDP growth when global tensions increase and particularly as global GDP growth improves.

Part of the problem, as Fullermoney often mentions, is that too many governments are obsessed with subsidising currently inefficient wind and solar energy projects, while balking at modern nuclear power plants or developing their own shale gas and oil reserves.

If you are able to access the FT's website link above, comments in response to Gavyn Davies' article are also worth reading.

Note: The European Financial Conditions Index mentioned by Gavyn Davies is now in the Subscriber's Chart Library.