Wall Street economists are anxiously awaiting and scrutinizing the economic indicators being released this week, which could predict if, when, and how deeply America will sink into recession. The numbers will also give investors a sense of how drastically the Federal Reserve is likely to cut interest rates later this month, in an attempt to revive America’s ailing economy.

Today, the Bureau of Labor statistics will release the December consumer price index, which measures the pace of inflation. The index recorded an uncomfortably high 0.3% increase in November, and many economists predict similarly large increases for December.

“The latest economic reports are becoming more and more important, because they offer insights on the direction of an economy that may be on the brink of recession,” an economist with Global Insight, Patrick Newport, said.

Through November, the cost of food and energy rose significantly, more than offsetting the slight decline in the cost of housing and fed inflation.

The rising price of food and energy are now beginning to “bleed through” to the other parts of the economy, according to the chief economist at IDEAglobal, Joseph Brusuelas.

“This captures the difficult cross-currents that plague both the economy and will make life difficult for the Fed throughout 2008,” Mr. Brusuelas said. If today’s CPI indicator is too high, the Fed may be reluctant to significantly cut interest rates, for fear of further accelerating inflation.

Economists are also expecting important signals about the health of America’s real estate industry this week, in the form of a December housing starts and permits report to be released tomorrow.

Mr. Newport expects “across the board ugly housing statistics” in the report. “When will housing hit bottom? Not last month,” he said.

Yesterday, three other economic indicators were released, all of which were weaker than expected: the Producers Price Index, the Empire State factory survey, and the retail sales figures for December.

The PPI, which measures costs for producers, fell 0.1%, while the Empire State factory survey, indicating the health of America’s manufacturing industry, fell to 9.1 in January from 22.2 in December. Overall retail sales fell 0.4% in December, reversing November gains.

“The combination of a weak holiday purchasing season and an extra week during the November sampling period combined to pack a negative wallop on December retail sales,” Mr. Brusuelas said.

Stock markets reeled yesterday at the indication that America’s economy continues to falter. The Dow Jones Industrial Average tumbled 277 points, or 2.2%, to 12,501. The S&P 500 Index, which is off to its worst start for a year since 1978, was down 35 points, or 2.5%, to 1,381.