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Expect (but don't fear) a scary GDP number this week

Is your head spinning trying to figure out which way the U.S. economy is headed? Welcome to the club -- the mixed signals these days are enough to make anyone dizzy.

Train your eyes on the stock market, which has tumbled in January amid mounting fears of a slowdown in global growth, and you might be forgiven for thinking that the U.S. economic recovery is about to slam into a wall.

"The swift correction in asset prices since the start of the year has equity investors focused on the potential for a recession in 2016," analysts with Goldman Sachs (GS) said in note this week.

The corporate sector is also belching smoke. Profits for S&P 500-listed companies have fallen three straight quarters, just the kind of "earnings recession" that often portends a slowdown in hiring. And the number of companies that experienced credit downgrades or debt defaults rose last year to their highest annual level since 2009, according to Standard & Poor's.

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Lingering over the poor financial results of manufacturing companies, which have been hurt by dwindling demand in China, and of energy companies, wounded by the decline in oil prices, also has some people fearing the worst.

Feeling nauseous yet? If not, just wait until Friday, when the U.S. Commerce Department is expected to report that growth in the final three months of the year slid to well under 1 percent. Most economists say the plunge in GDP in late 2015 stemmed chiefly from businesses moving more slowly to replenish their shelves, not a broader and more worrisome downturn in growth.

Still, the soft patch was mushy enough that the Federal Reserve on Wednesday acknowledged that growth slowed toward the end of last year. Only a month ago, central bankers were touting the economy's sturdiness in justifying their move to raise interest rates for the first time in a decade.

And lest we forget, such signs of distress in the U.S. come against a troubling backdrop overseas, as China continues to digest its years of overheated expansion, major economies like Brazil and Russia tank as a result of falling commodities prices and other factors, and the eurozone remains mired in seemingly permanent economic and political crisis.

That's the bad news.

The good -- and arguably more important -- news: If the U.S. has shown anything during the recovery that followed the Great Recession, it's that we can take a punch. Indeed, by some key measures the economy is doing just fine. Since October, employers on average have added a robust 284,000 jobs per month, lowering the nation's unemployment rate to 5 percent.

That helps explain why consumers, which account for two-thirds of economic activity, don't betray the same sense of panic that has afflicted investors. Americans continue to spend, buoyed by falling gasoline and food prices. Home sales are hopping. Businesses are investing. As for the turmoil in China, for now most forecasters don't expect it to do any serious damage to the U.S. this year.

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China is "a small piece of the economic puzzle, and the domestic economic fundamentals remain solid enough that we expect the U.S. to continue expanding even with the weakness we're seeing overseas," said Gus Faucher, senior economist with PNC Financial Services Group, noting that the Chinese market accounts for less than 1 percent of U.S. exports.

"We're adding more than 200,00 jobs per month and sold 17.5 million cars last year," he added. "New home sales look very good for December, so I'm just not seeing any signs of weakening in the domestic economy."

In other words, don't let the dismal GDP figures later this week turn your head around too much.

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