The patient clearly looks ill, but is there at least a steady pulse?
August U.S. payrolls and other data this week will provide critical evidence on whether the U.S. economy is slipping into a coma of barely perceptible growth, as some economists fear.
Our view is that the recovery is petering out, not sliding into a double dip, said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina. In our mind, the employment situation likely deteriorated in August.
After a recent bump up in jobless benefits claims, weak housing data and the Federal Reserve pledging to step up asset purchases if necessary, the headline numbers in Friday's payrolls are likely to add to a gloomy prognosis.
Economists polled by Reuters forecast an August drop of 99,000 non-farm jobs after a fall of 131,000 in July. The unemployment rate is expected to tick higher, to 9.6 percent from 9.5 percent.
The main culprit for the drop is the continued layoff of temporary government census workers. But if private-sector employment maintained growth and both working hours and hourly income also made gains, there would be reason for optimism that consumers have some capacity to spend money.
If companies are asking workers to put in more hours, that is a good sign that they will have to start hiring soon, said Bernard Baumohl, head of The Economic Outlook Group in Princeton Junction, New Jersey.
The Reuters poll forecasts a 0.1 percent gain in average earnings and a slight gain in weekly hours. Private payrolls are expected to rise by 42,000 after a 71,000 rise in July.
There are wide variations in the data. Vitner predicts a fall of 20,000 private-sector jobs in August, while Baumohl argues that fundamentals are better with an 80,000 rise. But even in the latter case, the growth will still likely be too weak to overcome gloom in markets and among business leaders.
Institute for Supply Management data on Wednesday will also show whether the slowdown has spread to the manufacturing sector. A key metric will be whether the new orders index falls below 50 in August after a drop in durable goods orders in July.
Many economists have been hoping that the factory sector would provide enough lift to offset the weak consumer and housing sectors.
But U.S. economic growth in the second quarter was marked down to 1.6 percent on Friday, prompting economists to ratchet back forecasts to around 1.7 percent for third quarter growth from 2.4 percent just two weeks ago.
Societe Generale credit analyst Aneta Markowska said too much of U.S. consumer demand was flowing to overseas producers to create sustainable job growth at home.
The hope was that the inventory cycle would induce enough manufacturing job growth to jump-start private demand and grease the wheels of the recovery cycle, but that process has failed to catch on, she wrote in a research report.
Auto sales data on Wednesday will provide another measure of consumer demand. Analysts are forecasting a rate roughly flat with July's, at 11.5 million units -- well below the year-ago rate, which was fueled by cash for clunkers tax credits. Forecasts for the second half and next year may be cut.
CENTRAL BANK MONEY FLOOD
The data should help the Federal Reserve decide whether to increase its quantitative easing program, under which it is reinvesting the proceeds from maturing mortgage debt into longer-term Treasury debt in an effort to push borrowing rates down further.
At the central bankers conference in Jackson Hole, Wyoming, Fed Chairman Ben Bernanke pledged that the Fed would increase asset purchases if needed, but he declined to say what would trigger bolder action.
Also on Wednesday, the Fed will release minutes of its August policy meeting, which may shed light on the central bank's options to increase quantitative easing and on the divisions it has caused between policymakers.
The European Central Bank also meets next week and is likely to extend its unlimited liquidity provisions, which had been due to start expiring in September. It aims to keep flooding money markets with cash to ease financial troubles in southern Europe.
Meanwhile, the ECB is likely to upgrade forecasts for overall European growth on a faster-than expected German recovery that is causing industrial workers there to demand higher wages
Axel Weber, an ECB governing council member who also heads Germany's Bundesbank, told CNBC in Jackson Hole that Europe was on the brink of a self-sustaining recovery. Germany's unemployment rate will be around 7 percent and will continue to fall, he said.
Japan's central bank also will be in focus next week over the possibility of unilateral intervention to curb the yen's rise.
Prime Minister Naoto Kan, who promised firm measures on currencies if needed, plans to outline new measures to support the economy and deal with the yen on August 31. First, he will confer with Bank of Japan Governor Masaaki Shirakawa, who attended the central bankers' conference in Jackson Hole.
A jawbone campaign by Japanese officials raising the specter of intervention over the past week has pulled the yen back from a 15-year high of 83.57 against the dollar. A continued rise threatens to derail an export-led recovery for Japan.
(Reporting by David Lawder; Editing by Dan Grebler)