Investors banking on a swift cut in the U.S. benchmark interest rate to ease market turmoil may be disappointed: Policy-makers may be reluctant to act before a week jammed with economic data in early September.

In the Labor Day holiday-shortened first week of the month, investors and monetary policy-makers will be poring over the Fed's Beige Book summary of anecdotal economic conditions on September 5; two key reports from the Institute for Supply Management on September 4 and September 6; and the August employment situation data on September 7.

The Fed's Beige Book will take on added importance in this environment, economists at Wrightson ICAP wrote in a report this week. We think the single most important question facing the Fed is whether financing constraints will have a chilling effect on capital spending.

While many investors are betting on an interest rate cut before the Fed's next scheduled monetary policy meeting on September 18, central bankers' primary concern is the health of the economy, not financial market unrest.

Global financial markets began the latest bout of volatility on August 9 when credit terms tightened dramatically in Europe after France's biggest listed bank froze three funds with links to the U.S. subprime mortgage mess.

Since then, central banks worldwide have injected hundreds of billions of dollars in emergency money to ease the strain, and the Fed last week lowered its rarely used discount rate on direct loans to banks.

July data showed a surprisingly resilient U.S. economy, with consumer spending slowing but not collapsing, and the manufacturing sector displaying signs of life.

However, those reports predated the worst of the credit market turmoil, which can affect everything from consumer sentiment to corporate access to money, so the next round of data looms particularly large.

CHECKING THE NUMBERS

The Fed needs information that post-August 10, economic activity has taken a decided turn for the worse, said Paul Kasriel, economist with Northern Trust in Chicago.

I am confident that the FOMC will lower its federal funds rate target before year-end, but I am not as confident it will occur on or before the September 18 FOMC meeting, he added. It very well may be that the evidence that the U.S. economy is flirting with a recession is not forthcoming until after the September 18 FOMC meeting.

That would be a big disappointment for financial markets, which have clawed back from last week's free-fall largely on hopes for a quick rate cut.

Kasriel said August auto sales and the ISM manufacturing survey, both expected on September 4, would weigh heavily in the Fed's monetary policy decision.

For the Fed, whose main mission is to promote low inflation and a strong job market, a solid employment report would also send a signal that the economy was holding up in the face of a faltering housing market and the wild swings on Wall Street.

A healthy job market means consumers should keep spending, and that most homeowners will be able to pay their mortgages. When people pay their mortgages, investors who bought mortgage-backed debt also get paid, which would go a long way toward easing mortgage market concerns.

On Tuesday, U.S. Treasury Secretary Henry Paulson said it will take time for the market turmoil to play out, but added, We have the benefit of having a very strong economy to absorb some of the losses along the way.

However, Paulson acknowledged that the capital market problems would take a toll on economic growth.

Since Paulson correctly points out that the global economy and U.S. economy are both pretty strong, we'll be on a heightened state of alert for any weakness from data releases, said Andrew Busch, global foreign exchange strategist with BMO Capital Markets in Chicago.

This will be especially frenzied next month as we get data for August and we find out more information on who's not going to make it, Busch said.

U.S.