Like a rabid beast, the contracting U.S. economy has attacked a bellwether industry yet again, and left a gaping wound in the outlook for domestic coal miners.

Peabody Energy (NYSE:BTU) coated its fair share of green shoots with thick black soot Tuesday, revealing further deterioration in coal-fired electric generation and increasing prior estimates for 2009 demand disruption by 33%. Peabody investors, please remain calm ... this miner's skin is tough, and repels most of the bite.

The king of coal roiled the sector with a 66% cut in net earnings to $79 million, from $233 million a year earlier. The comparable 2008 quarter, you'll recall, marked the very peak in the global coal market before a monster correction took hold last July. Also worthy of consideration: Results included a 47.7 million tax hit relating to an 18% drop in the value of the U.S. dollar relative to the Australian dollar. Adjusting for that currency impact, earnings from continuing operations precisely matched analyst estimates of $0.49 per share.

Decoupling confirmed
Anyone familiar with my coverage of the coal sector, steelmakers like POSCO (NYSE:PKX), or equipment manufacturers like Joy Global (NASDAQ:JOYG) knows that I've been documenting the growing dichotomy between demand conditions for industrial goods in pan-Asian economies vis-a-vis the United States economy for several months. With absolute confirmation of this phenomenon through this latest release from Peabody, I think that abruptly abandoned decoupling concept can now be proven viable with a mounting pile of supporting evidence.

According to Peabody President and CEO Richard Navarre: "The Pacific markets continue to strengthen, with record net coal imports flowing into China and low stockpiles in India." Meanwhile, of the U.S. market, he states: "As a result of higher inventories, U.S. markets will take a longer time to rebound."

As of the end of the first quarter, Peabody Energy estimated a 90-million-ton reduction in total U.S. coal demand in 2009 over 2008. Rival Arch Coal (NYSE:ACI) took a more bearish view, anticipating a 100-million-ton decline. I predicted that such estimates would remain moving targets, since the U.S. economy appeared to face mounting macroeconomic headwinds, and Peabody's revised expectation of 115 million to 125 million tons of demand disruption in 2009 offers corroboration that the domestic coal market continued to deteriorate substantially during the second quarter. Railroad operators like CSX (NYSE:CSX) saw that train coming from miles up the tracks.

I continue to view the global king of coal as the very best the industry has to offer for investors, and renew my belief that Fools should distance themselves from certain domestic names, especially Appalachian miners like Massey Energy (NYSE:MEE) and Peabody spin-off Patriot Coal (NYSE:PCX).

Further Foolishness:

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Fool contributor Christopher Barker wishes he could squeeze coal into diamonds. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Arch Coal and Peabody Energy. The Motley Fool scrubs its disclosure policy before releasing it into the atmosphere.