Global Economy: Evaporating inflation, elusive growth By Jeremy Gaunt LONDON (Reuters) - Janet Yellen is expected to get the final political nod in the next couple of weeks to chair the U.S. Federal Reserve. So when she signaled in congressional testimony last week that the U.S. economy was still in need of easy money, it was more than a throwaway line to please vetting senators worried about their voters' lack of jobs. Yellen was using her clout to highlight the two main characteristics of the world economy: Recovery in America and elsewhere is not yet durable. And there is no fear that inflation will demand an end to the ultra-low interest rates and money-printing being used to sustain what growth there is. This week's economic data drop touches on both sides of this equation - U.S. consumer inflation for October is reported on Wednesday and preliminary purchasing managers' indexes (PMI) for both the euro zone and the United States are out a day later, along with Philadelphia Fed's November business index. Inflation's amazing disappearing act is rising to the top of the agenda in many economies. Fears of Japan-style deflation are premature but recent slides have at the very least raised policymakers' interest. A plunge in euro zone inflation to just 0.7 percent in October prompted the European Central Bank to deliver a surprise interest rate cut, though not with unanimous support from its members. The bank targets at or slightly below 2 percent as the level it considers inflation healthy, and the economy is still moribund. Other non-euro countries in the region are reporting much the same on inflation. Poland's is running at 0.8 percent, Sweden had a month of falling prices, and even Britain's relatively high cost-of-living unexpectedly dropped to 2.2 percent year-on-year in October. Although the U.S. consumer price index figures to be released this week are not the ones the Fed targets, they may point to inflation shrinkage as well. The early consensus is for October CPI to show no increase month-on-month from September, when the annual rise was 1.2 percent. Some analysts even predict a fall in prices for the month. The Fed targets either side of 2 percent for inflation. It favors the PCE, or personal consumption expenditure, index, which tends to run slightly lower than CPI. It was up just 0.9 percent in the 12 months through September. "We are not seeing any upward inflation pressures - generally the opposite," said Sarah Hewin, Standard Chartered Bank's head of economic research for Europe. The immediate fallout from any sign of diminishing U.S. inflation would be further to boost expectations that the Fed will delay any slowing of its quantitative easing (QE) asset-buying program. Yellen has already fed this expectation at her confirmation hearing. Falling inflation would mean the QE money-printing might even be useful to ward off any deflation threat, on top of pumping up the economy. This, in turn, will provide some succor to emerging markets - particularly those with high current account deficits - that have seen their currencies clobbered as the prospect of U.S. stimulus ending has pulled cash out of their economies. India, Indonesia and Turkey have been particularly hard hit this year. Markit's flash PMI indexes are expected to underline the unevenness of economic recovery, particularly in the euro zone. Third-quarter gross domestic product released last week showed the euro zone barely growing with No. 2 economy France contracting and No. 1 Germany's pace of growth slowing. Analysts at Barclays described the euro zone as undergoing "a somewhat disappointing recovery." The consensus forecast for the flash euro zone composite PMI, incorporating both manufacturing and services, is for a very slight rise to 52.0 from 51.9 a month earlier. That would indicate expansion and be the highest since the middle of 2011. But it is still below its long-term average. The U.S. economy is, on the face of it, in better shape. GDP grew at an annual 2.8 percent in the third quarter, albeit boosted by inventories. But data has not been not uniformly upbeat. Weekly jobless claims and trade numbers last week showed weaker progress than expected. A Reuters poll suggests that the Philly Fed's business index - one of the first looks at November - will fall quite sharply. Yellen, meanwhile, has made clear that she sees the economy as below its potential. She intends to keep working at getting it into sustainably strong shape. Additional reporting by Tim Ahmann in Washington, editing by Mike Peacock