The International Monetary Fund has lowered its forecast to only 3.7 percent global GDP growth this year. Considering how fast China and India are growing, this implies sluggish growth almost everywhere else in the world. Certainly, the domestic economy barely grew at all in the first quarter, with some speculating there might have been a small decline.

Europe and the rest of the Pacific Rim are doing a little better. Higher energy and food prices, plus continued pressure on prices of other raw commodities are part of the rationale for expecting lower growth. The ongoing credit freeze helps no one, and the longer it continues, the greater the chance that even these revised growth estimates might prove overly optimistic.

Domestically, this coming week could be one of very welcome good news. Home building (but not necessarily home buying) could be nearing a bottom. That's brighter than anything seen out of the housing market in the past year and a half. If home buying follows, it could be even better news. It would be premature, in any case, to expect home prices to be firming. That is going to take longer, perhaps a lot longer, even if construction is no longer declining.

The world's economy grew by nearly 5 percent in 2007, and will struggle to grow by 3.7 percent this year (the IMF's revised outlook). With Leading Economic Indexes across the globe generally declining over the past six months, it is crystal clear that the world economy is losing a little steam. There is a world of difference, however, between losing steam and grinding to a halt. The domestic economy may be close to the latter, but not so for the globe.

In addition to the short-term changes in the cycle — global or domestic — some fundamental structural changes could be developing. Certainly, the shape of international finance will be different after the current credit freeze. The question is how different. Meanwhile, there is debate on the direction of oil prices. Some say the corrective for high oil prices is higher oil prices. That is, if speculation drives the price high enough, market reactions will set in and drive the price lower, perhaps down to $70/bbl. But if triple digit prices for crude oil are more the product of demand and supply than speculation, getting back below $100/bbl may not be in the future.

Lastly, in part because of the cost of energy, there could be a change in how globalization has impacted inflation. To date, globalization and greater access to information (from computers, etc.) has helped limit pricing, and pricing power. Has a limit of sorts been reached? And how would higher energy prices and a little higher inflation (lower productivity?) impact the future direction of business cycles? These are questions to be answered, but only after more basic answers are available. How slow will the domestic economy get? When? How much drag will that exert on the global economy? What happens this spring and summer should provide some clues to these questions — which simply are not answerable today.