Fragile world financial markets are nervously watching for signs that US consumers are losing the willingness to prop up the US economy with their spending.
Investors, who have refused to be soothed by economists detecting early hints of recovery, were rattled in the past week by two surveys showing declining consumer confidence in the US.
Investors fear bad news in US unemployment data will slow consumer spending, which accounts for two thirds of gross domestic product. The unemployment report is due to be released on Friday.
"It is a fragile mood because you have manufacturing flat on its back and the high tech basically flat on its back, both with inventory problems," said Conference Board economist Delos Smith.
Meanwhile, the housing market had held up surprisingly well, the auto market had slipped slightly in July and retail sales were just acceptable, the economist added.
"And, of course, that just begs the question, when will the consumer get discouraged or will it get discouraged?"
The Conference Board reported last Tuesday that its consumer confidence index fell to 114.3 from a revised 116.3 in July.
Then the University of Michigan's consumer confidence index fell on Friday to 91.5 points in August from 92.4 the previous month, defying Wall Street's hopes for a slight rise.
"The fact you have had two numbers and they are confirming the same trend is starting to show that the weakness in equity markets and layoffs are finally having an impact," said Eaton Vance economist Robert McIntosh. "I am afraid that will translate into an actual reduction in spending."
Those fears were stoked by government figures on Thursday showing consumers lifted spending a meager 0.1 percent in July despite big tax cuts.
Economists said consumer spending was still robust and the figure had been dragged down by lower oil prices and the fact that tax rebate checks only arrived at the end of the month.
But the investors' concerns helped send Wall Street's blue-chip Dow Jones industrials index slumping 473.42 points, or 4.54 percent, to 9,949.75 in the past week, taking European and Asian markets down in its wake.
"After a weeklong slide in the holiday-thinned stock market, reflecting disappointing consumer confidence and spending data, the focus likely will turn to next week's employment report," said a report by Salomon Smith Barney.
"Upcoming labor market data could disturb financial markets further, but we do not think that jobs numbers hold the key to whether the economy will recover or falter again.
"Instead, we look to the labor market for signs that the hard-hit business sector is making the necessary adjustments to compensation costs to restore profitability."
The unemployment rate had only ticked up 0.6 percentage points to 4.5 percent since the downturn began, the report added, and any sign of further slack would give the Federal Reserve an open hand to cut interest rates further to stimulate the economy.
Markets, however, appeared to ignore the glimmer of light at the end of the end of the tunnel for the manufacturing sector, which has lost 837,000 jobs in the past year.
Orders at US factories rose 0.1 percent in July, the Commerce Department said on Friday, defying forecasts from Wall Street for a 0.5 percent decline.
Inventories also dropped 0.6 percent, a development welcomed by analysts because it positioned the manufacturing sector for a recovery when excess stockpiles are finally exhausted.