Warning lights flash on global economy's dashboard

— -- For the past year, as the United States wallowed in financial crisis, the economies of Europe and Japan continued to grow. No longer.

Now, both of these key trading partners are shrinking, imperiling the strongest remaining pillar of the U.S. economy and complicating prospects for an early return to stability. The worrisome prospect of a global recession — last seen in the early 1990s — is emerging as a realistic danger.

"The growth situation has gotten markedly worse outside the United States recently. … We're probably looking at a year and a half of subpar growth" for Japan, Europe and the U.S., said Kenneth Rogoff, former chief economist for the International Monetary Fund.

Just how bad is it out there? For all its myriad weaknesses — wounded financial institutions, depressed consumers and sinking home prices — the U.S. was the best-performing economy in the industrialized world in the second quarter, according to the Paris-based Organisation for Economic Co-operation and Development. The U.S. grew at an annualized rate of 3.3% in the quarter ended June 30, the Commerce Department said last week, while Europe and Japan both posted negative numbers.

"The Eurozone and Japanese economies are on the verge of recession," French investment bank Societe Generale said last week in a research note.

After almost two decades of relentless globalization, what happens abroad is increasingly central to the health of the U.S. economy. In 1980, foreign transactions of all kinds — trade of goods and services as well as investment earnings — equaled about one-quarter of the economy. In 2006, the most recent figure available, they reached nearly 39% of gross domestic product, according to the Commerce Department's Bureau of Economic Analysis.

From lawn mowers to syringes, American factories in recent months have been sending an increasing volume of goods to foreign customers. Exports of manufactured goods and agricultural products were responsible for almost all of the surprisingly solid second-quarter number.

The U.S. uptick also was undoubtedly helped by tax rebates that put more than $93.4 billion into consumers' hands starting in May. With most of that money spent, and the index of leading economic indicators pointing down, analysts say the current quarter is unlikely to be as good. Outside the U.S., skies are darker, raising questions about how long the export boom can continue.