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Markets are emotional creatures, and so a disappointing report on durable-goods orders was enough, when combined with a smattering of lousy corporate earnings reports, to propel Wall Street into the slough of despond on Tuesday. But shareholders shouldn't lose hope just yet.

The S&P 500's decline was really about the unrealistic hopes for growth that investors had built up. Look beneath the top line figures and the American expansion appears to be trundling along much as it has for several years now – with no great speed, but still fast enough, all things considered, to be the gold medal favourite in the tortoise race among developed-nation economies.

The biggest impact of the durable-goods numbers will be to make traders even more uncertain about the outlook for interest rate hikes later this year. While most investors had been counting on the Federal Reserve to begin to boost rates this summer, the case for waiting until the economy is stronger is gaining momentum.

Orders for durable goods – stuff such as stoves, drills and cars, designed to last at least three years – fell 3.4 per cent in December from a month earlier, according to the U.S. Commerce Department. Most of that slide was the result of falling sales for civilian airplanes. But even excluding the volatile transportation segment, new orders still fell 0.8 per cent – a shock to economists, who had expected to see solid growth in the number, given recent signs of a stronger economy.

Paul Ashworth of Capital Economics said he was surprised by the decline, but noted that the softness is concentrated in the machinery category.

"The weakness either reflects a big collapse in the mining sector or the strong [U.S.] dollar is persuading firms to buy cheaper imported machinery," he wrote in a note. "Neither is good news for investment, but we still think that lower oil prices will mean that real GDP growth remains close to 3 per cent annualized in the first quarter."

U.S. industry may be feeling the effects of a cooling global economy. China's growth is decelerating, Europe is on the brink of recession, and Japan is already there. Canada, of course, is wrestling with its own issues, particularly the impact of dramatically lower oil prices.

Until recently, the U.S. appeared to be the exception to this general gloom. Unemployment had fallen steadily (although much of the decline was the result of people dropping out of the work force) and GDP grew at a rollicking 5-per-cent annualized clip in the third quarter.

There are still signs of cheer: New-home sales hit their highest level in more than six years in December, a signal that the battered construction sector may finally be regaining strength. But the durable-goods orders suggest this recovery, overall, is still only limping ahead.

That won't come as a big surprise to observers like Dean Baker of the left-leaning Center for Economic and Policy Research in Washington, who has been warning for a while that the U.S. economy is not expanding as quickly as some optimists would like to think. In October, he predicted that GDP growth in the next few months would be in the range of only 2 to 2.4 per cent, as muted wage gains hold back consumption and a strong U.S. dollar stymies export growth.

A more optimistic viewpoint comes from David Rosenberg, chief economist of Gluskin Sheff + Associates in Toronto, who noted Tuesday that the Conference Board's leading economic indicator for December is consistent with GDP growth of at least 3 per cent.

But whether the number comes in at 2 per cent or 3 per cent, it's difficult to see what would be gained from the Federal Reserve stomping on the brakes at a time when the recovery has yet to surge ahead and U.S. exporters are struggling to deal with the impact of a much stronger dollar. Expect the Fed to proceed with caution.