The U.S. employment report for May will measure America's economic resilience to the political turmoil in Europe that is weakening the global growth outlook.
Manufacturing slumped in both China and the euro zone in May, Britain is in recession, Brazil is stagnating and India's growth is faltering, leaving the United States as a relative bright spot in an uncertain world.
Home sales in the United States are perking up, consumer sentiment reached a four-year high in May, and the pace of job layoffs has slowed over the past month, all pointing to a gradual healing in the U.S. economy.
Falling gasoline prices also are pumping up spending power into consumers' pockets. While there are some soft spots - capital goods orders are weak and manufacturing eased in May - it is not enough to derail a plodding U.S. economic recovery.
The government's closely watched monthly jobs report due out on Friday could prove pivotal.
If employment gains accelerated in May to 150,000, the consensus in a Reuters poll and up from the 135,000 monthly average over the past two months, it would suggest the economy has regained internal momentum and has greater ability to withstand the headwinds from Europe.
"The global economy is struggling. There is recession in Europe, a slowdown in emerging markets that hasn't fully run its course and China decelerating. To offset this trend, you have modest growth in the United States and Canada," said Craig Alexander, chief economist at TD Economics.
"Political risks are high but if Europe muddles through, a risk that has not yet fully run its course, we should see moderate U.S. growth continue," he said.
A weaker jobs number and a rise in the unemployment rate from the current 8.1 percent level, however, would suggest that businesses are growing increasingly wary as financial markets display unease over Europe and the rest of the world slows.
Narim Behravesh, chief economist at IHS Global Insight, said he sees little evidence yet that Europe's problems have spilled over to the United States. He said he is tempted to think that the slowdown in emerging markets is temporary, reflecting the lagged effects from their monetary tightening in the latter half of 2011. Additionally, a fresh round of stimulus measures promised by China should prevent a serious slump.
"We will probably see another couple of months of mixed data and then a firming, as long as Europe steers clear of crisis," he said.
EUROPEAN HIGH-WIRE ACT
But Europe is casting a long shadow.
European Union leaders are playing a high-wire act in trying to convince the Greek public ahead of fresh elections on June 17 that they must stick to their austerity program if they wish to remain in the euro zone monetary union.
But as governments and banks draw up contingency plans to handle a possible Greek euro-zone exit, and polls show the leftist anti-austerity camp holding a lead in Greece, investors' hopes are diminishing for a happy ending in Europe.
Further complicating the picture is Spain, where the banking system needs recapitalizing and regional governments are running short of cash. This makes Spain highly vulnerable to market attack if Greece were to leave the euro. Italy, Portugal and Ireland could then be in the line of fire.
"The situation in Europe is becoming more uncertain," Michelle Meyer, a Bank of America economist, warned clients.
Lacking a clear road map for how EU leaders plan to stabilize the financial system and shore up monetary union, investors are fleeing the euro. It has lost more than 5 percent of its value in less than a month to reach a 22-month low against the dollar.
The weakening euro raises concern about spillover effects to the United States economy, even if Greece stays in the euro zone.
A costlier U.S. dollar makes U.S. exports more expensive in world markets, and if Europe sinks into recession, the United States will lose one of its primary export markets.
But the trade impact on the U.S. economy would be quite small. Trade with Europe accounts for only a sliver of total U.S. output, or 1.3 percent, and Bank of America said that recent research shows that exchange rates are far less of a factor today in determining import prices than they were in prior decades.
The International Monetary Fund, Bank of International Settlements and the U.S. Federal Reserve have found that the pass-through effects of exchange rates to import prices have declined to about 20 percent from 50 percent in 1970s and 1980s. And the Organization for Economic Cooperation and Development found it would take a 10 percent depreciation of the euro against the dollar over one year to shave 0.1 percentage point from annual U.S. growth in gross domestic product.
The primary impact on the United States from a worsening European crisis would be from financial markets turmoil.
If global stock markets plunged and the banking system in Europe seized up, Craig Alexander at TD Economics said, "It would be a mess. It would be welcome back to Lehman Brothers in 2008."
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