Sluggish growth, weak job market ahead

By Mark Felsenthal

WASHINGTON (Reuters) - The global economy appears to be shaking off a deep recession, but the recovery is likely to be anemic and some damage could be long-lasting.

The United States and Japan look set to pick themselves off the mat first among major economies with gradually improving business confidence, but high unemployment is expected to linger in the United States and Europe.

Analysts see the U.S. and Japanese economies resuming growth by the third quarter of this year, with the euro zone trailing by about a quarter.

"The timing and speed of recoveries will vary, with Asia leading, the U.S. coincident and much of Europe lagging behind," said IHS Global Insight economists Nariman Behravesh and Sara Johnson.

In the United States, strong orders for durable goods and the first rise in consumer spending since February added to signs last week that the worst of the deep downturn may have passed in the world's largest economy.

But with businesses still reeling from the impact of the financial crisis and the housing-market implosion, the U.S. jobs market has a rocky road ahead. That will weigh on consumer spending, which accounts for more than 70 percent of economic activity.

"Unfortunately, double-digit unemployment is not too far away," economists at Wachovia Economics Group told clients last week.

The Paris-based Organization for Economic Cooperation and Development raised its economic outlook for its 30 members countries for the first time in two years last week, but warned that soaring unemployment and ballooning budget deficits pose risks to a fragile recovery.