A tale of contrasts last week on global economic growth, with data from Europe and the US the standouts and helping explain why markets have gone all mushy so quickly.

While news on Friday was of the strong growth in Germany, the figures from other eurozone economies such as Greece, Spain and Italy were weak.

And the figures from the US on retail sales (job vacancies on Thursday) and consumer sentiment were weak and confirmed the downgrading by the Fed.

Before the Fed's meeting last Tuesday US time, Goldman Sachs economists had cut their estimate for third quarter US growth to 1.9% (annual).

In the wake of the Fed's downgrade and the data flow, the consensus 2.5% rate for the third quarter (the estimate is out next week) won't last.

Nomura and several mother firms now have forecasts around the 1.3% (annual) rate.

And the trade and business sales and spending data has seen the second quarter first estimate of 2.4% cut to around the 1.2%-1.4% annual rate, according to a spate of downgrades.

Apart from Germany (which accounted for the majority of the 1% eurozone growth rate in the second quarter), the rest of the major economies of the world are fading.

Chinese growth is heading towards 9%, according to some early forecasts, based on weakening industrial production, retail sales and urban investment, Japan's economy is sliding as export growth evaporates, South Korean growth is starting to look 'toppy' and in Australia growth seems to be weak as well. (We get Japanese second quarter economic figures later today.)

The Bank of England last week cut its growth forecasts for Europe's second-largest economy.

The central bank said last week that UK growth may peak at a 3% annual rate, instead of the 3.6% issued in May.

UK second quarter growth was 1.1% (quarter on quarter), Europe's was 1%, America's was 0.6% in the first estimate (which will probably halve to 0.3%) in the revisions, and perhaps continue at that level this half.

Eventually the worsening outlook for the US economy will translate into earnings downgrades and US share prices will come under pressure.

Germany is driving the eurozone's economy while peripheral nations falter.

Germany, which grew 2.2% (quarter on quarter), was responsible for almost two-thirds of the eurozone's growth, even though it only accounts for about a quarter of the area's economy.

In Spain, the economy expanded a less-than-forecast 0.2%, Italy and Portugal by 0.4%, France was up just 0.6% and boasted about creating 35,000 jobs in the quarter (which we in Australia have done several times in a month this year).

Greece's economy contracted 1.5%, while Ireland seems to be staggering towards another debt crisis with borrowing costs rising sharply last week for no reason.

Economists point out that the bounce in Germany was off the back of the lower euro earlier this year, which has been reversed since mid June as the US dollar has fallen.

So they question how long it will continue, given that major markets for the country are slow or weakening (China, US).

We also had two warnings last week from major global corporates whose words should be noted.

VW's head of sales surprised was quoted in European media on the weekend as warning of a sharp second half slow down in car sales.

Much of the improvement in production and exports from Germany and France has come from the impact of government-supported car schemes, as well as the cheap euro.

Germany's car sector, especially BMW and Mercedes, have had some of their best exports on record in recent months, with sales returning to high levels in Asia, (especially China) and Russia, as well as other parts of Europe.

The Financial Times said Christian Klingler, VW's executive board member and head of sales, cautioned of a bumpy road ahead after the car-maker's July sales growth considerably slowed down.

"Now that incentive programmes have come to an end the global automotive market is expected to decline in the second half of the year," Mr Klingler said in a warning that took even close market observers by surprise, the paper reported.

Chinese car sales are slowing noticeably and could fall on a year on year comparison from this month or September onwards.

And Cisco Chief Executive John Chambers warned that the technology giant was seeing "mixed signals" and an "unusual uncertainty" as fiscal first-quarter sales were lower than expected and the forecast for the full year was also disappointing on investors.

Cisco straddles the tech and industrial and service economies (especially governments) with its networks, servers and other equipment. Its shares fell heavily after the downgrade.

Mr Chamber's comments tell us that even the solid tech sector in the US in particular, is starting to feel the impact of fading demand and drifting sales.

In the US, retail sales figures on Friday were not solid, although the headline figure gave the impression of being sort of OK as they were boosted by manufacturer subsided car sales.

Canadian economist Dave Rosenberg said in a commentary at the weekend that "the details were awful".

"We knew that stepped-up incentives gave a brief lift to auto sales, so no surprise on that front.

"But the component of sales, or what is otherwise known as "retail control" which strips out building materials, gas and autos, fell 0.1% MoM ? the second decline in the past two months.

"The consensus was looking for +0.1%, so as always the devil is in the details and, boy, were they ever soft.

- Clothing/accessory sales down 0.7% MoM and off four months in a row.

- Home improvement down 0.3%, as were furniture sales ? anything with a housing feel to it is still on a discernible downtrend. That goes for the once hot electronics/appliances segment, dipping 0.1% last month.

- Grocery stores posted a 0.3% MoM decline; and while restaurants did manage to eke out a 0.2% gain in July, this followed a three-month losing streak. Did all those iPad purchases come at the expense of the food bill?

- Even drug stores showed no sales growth in July. - Sporting goods and the like were off 0.1%. And, the list goes on.

"The dispersion of the sales weakness outside of the motor vehicle sector was palpable. Not a good omen for the back-to-school season, but what should we really expect at this point with jobless claims heading back up towards the recessionary 500k threshold.

"Initial jobless claims rose 2k in the August 7th week from an upwardly revised 482k level the week before ? not to mention well above consensus estimates of 464k.

"A month ago, claims were sitting at 458k and we are now at the highest levels since late January.

"This is simply awful and if claims back up above 500k, for at least a few weeks, double-dip risks will rise materially.

"Core inflation (which removes the effects of food and energy) did remain tame at +0.1% MoM in July but unfortunately, you cannot deflate retail sales with core inflation, people do spend a goodly part of their budget on food and energy.

"It looks like the consensus has further to go in trimming its Q3 real GDP forecast of 2½% ? and with it, we should see a drumbeat of downbeat guidance out of the corporate sector for investors to chew on.

"Finally, a bit of good news ? the University of Michigan consumer sentiment index managed to tick up 1.8 points in the early August read, to 69.6.

"This was better than the market expectations of 69.0, but the damage is done as this 1.8 point increase only reverses part of the 8.2 point drop in July.