International Forex Inforamtion

By Emily Kaiser

WASHINGTON, Oct 4 (Reuters) - If this is the recovery, it doesn't look much different from the recession so far.

U.S. companies are still cutting jobs. German consumers aren't in a buying mood. In Japan, even a recent glimmer of good news was met with skepticism. Figures on Friday showed the unemployment rate unexpectedly fell in August, yet many economists questioned whether it was just a one-month blip.

"Did someone say that the crisis is over?" said Lena Komileva, head of G7 market economics at Tullett Prebon in London. "Even when a genuine recovery ... gets underway and lifts growth above the zero mark, broken credit channels are likely to perpetuate the feeling of recession."

That sinking feeling is likely to be on the minds of finance officials gathering in Istanbul this week for International Monetary Fund and World Bank meetings.

World Bank President Robert Zoellick warned leaders on Friday not to mistake signs of stabilization for a sustainable recovery and conclude their crisis-fighting work is done.

"The danger today is one of complacency," he said. "There will be a natural tendency to return to business as usual, and it will become harder to convince countries to cooperate in order to address many of the problems that led to this crisis, that put millions of livelihoods of people at risk."

That point probably won't be lost on European Central Bank and Bank of England officials, who hold policy-setting meetings on Thursday. Both are expected to keep benchmark interest rates steady at record lows, although they may acknowledge a somewhat brighter economic outlook.

MIDDLE OF THE "W"

Although the global economy appears to have resumed growth in the just-ended third quarter, there is no disguising the continuing pain in the labor market. In the United States alone, more than 7 million people have lost their jobs since the recession began in December 2007.

Employment normally doesn't rebound until well after the recession ends, but the high and rising tally bodes ill for consumer spending and debt repayment, both of which are essential to healing the economy and the banks.

That is why some economists are beginning to worry that this recovery may be nothing more than a brief upswing before the next slump -- the dreaded "W" shaped double-dip recession.

Harm Bandholz, an economist at UniCredit in New York, is concerned that once businesses have restocked depleted inventories and government stimulus spending runs dry, economic growth will evaporate.

Indeed, he said a disappointingly tepid report on manufacturing last week marked "the most clear-cut signal that the technical rebound of the U.S. economy might have reached the middle of the 'W'."

Consumer spending is at the heart of the U.S. economy, and it remains a weak link. The next big test of the consumer psyche comes on Thursday, when many of the largest retailers report September sales results. Analysts expect another lackluster month as households cut back on all but essentials.

William Dunkelberg, chief economist with the National Federation of Independent Business, said small retailers in particular were feeling the pinch from newly frugal customers. His group surveyed 827 small business owners in September and found that only 7 percent planned to create new jobs in the next three months while 16 percent planned to cut.

"We should see retailers getting ready to hire (for the holiday season) and in our survey that didn't happen," he said. "We still have more firms in retailing planning to reduce jobs over the next three months than planning to add."

Some of that is a consequence of the broken credit channels that Tullett Prebon's Komileva mentioned. Small businesses are having an especially tough time getting loans.

The same goes for consumers. Whether by choice or by force, Americans are paring credit card debt at a rapid clip. Federal Reserve figures due on Wednesday are expected to show consumer credit dropped by $10 billion in August, which would mark a seventh consecutive month of declines.

Demand looks weak elsewhere, too. Euro-zone August retail sales are scheduled for release on Monday, and are likely to show a decline, according to analysts polled by Reuters.

Yet there are a handful of prominent economists who think growth will snap back, even if consumers are downbeat. Dean Maki, an economist with Barclays Capital in New York, argues that businesses cut too deeply into payrolls and other expenses when the financial crisis peaked a year ago.

"The downturn proved deep, but the economy avoided a depression," he said.

"It is now rebounding in a way that is probably surprising to many firms, and profit growth is accelerating. Once firms get the sense that the recovery will last, we believe the investment cutbacks that looked prudent when sales were plummeting will start to look excessive." (Editing by Neil Stempleman)