Under new projections, the White House said it expected gross domestic product to increase 1.7 per cent this year, down from the 2.7 per cent expected back in February, and 2.6 per cent in 2012, down from a 3.6 per cent prediction in February, according to Reuters.
"The economic outlook is still shaky, and that's been driving the industrial metals and the energy sector lower," Michael Banks, a London-based analyst at Hermes Commodities, told Bloomberg News. "It's something we see continuing for the next one to three months."
And it's not just what's happening in America that's making it hard for investors to decide what to do with their money.
Data showed that euro-zone manufacturing contracted more than initially expected in August while Chinese manufacturing growth held near the lowest level in 29 months.
In late afternoon trading, the Dow Jones industrial average shed 0.59 per cent, the Standard & Poor's 500 Index dropped 0.79 per cent and the Nasdaq Composite Index fell 1.03 per cent.
Analysts at UBS have reviewed the performance of the S&P 500 and they think investors have got it wrong. The analysts are seeing double-digit gains for the benchmark by the end of 2011, Reuters reported.
Excluding the current downturn, the S&P 500 has shed more than 17 per cent 14 times since the end of World War Two, but the economy only fell into recession on nine of those occasions, equity strategists of the Swiss bank wrote in a research note published on Thursday.
"Put differently, the market predicted roughly a third more recessions than actually occurred," they wrote in the report, entitled "14 of the last 9."
The S&P is trading at 11.3 times estimated earnings, below UBS's fair value estimate of 12.5 times, the report notes.
More immediately though, investors eyes are on tomorrow's Labor Department report, which is expected to show non-farm payrolls climbed by 68,000 after a 117,000 increase in July, according to the median forecast of economists surveyed by Bloomberg News.
Goldman Sachs economists today cut in half their expectations for job gains to 25,000, pointing to the slow pace of hiring in late July and August
In Europe, central bankers are starting to become a bit more forthright in their views on the situation in the U.S., perhaps looking to deflect criticism about how the EU is - or is not - managing its finances.
"The crisis is not over. Not just in Europe is it not over, it is also not over in other regions of the world," European Central Bank policymaker Juergen Stark said, Reuters reported, adding the US had an "enormous" debt problem and lacked the structures to get the problem under control.
Stark said there was no alternative but for countries to take painful steps to consolidate their public finances.
The key is who is willing to take those steps.
