| WASHINGTON
- The long-suffering job market is ending the year better
off than it began.
The number of people applying
for unemployment benefits each week has dropped by 10
percent since January. The unemployment rate, 8.6 percent in
November, is at its lowest level in nearly three years.
Factory output is rising,
business owners say they're more optimistic about hiring and
consumer confidence has jumped to its highest level since
April. Even the beleaguered housing market is looking
slightly better.
"We are ending the year
on an up note," says Joel Naroff, president of Naroff
Economic Advisors.
Still, 25 million Americans
remain out of work or unable to find full-time jobs. Most
analysts forecast a stronger economy and job growth in 2012
— and rule out a second recession — but they caution
that could change if Europe's debt crisis worsens or
consumers pull back on spending.
On Thursday, the Labor
Department said the number of people applying for
unemployment benefits last week rose 15,000 to 381,000. But
the four-week average, a less volatile measure, dropped to
375,000 — the lowest level since June 2008.
When applications for
unemployment benefits consistently fall below 375,000,
economists consider it a reasonable sign that hiring is
rising enough to push the unemployment rate lower. The
four-week average has remained below 400,000 for seven
weeks, the longest stretch since April.
A mildly positive report on
housing also came out on Thursday. The National Association
of Realtors said the number of people who signed contracts
to buy homes rose in November to its highest level in a year
and a half.
The association sought to
temper enthusiasm by noting that the number of canceled
contracts is also on the rise. But financial markets seized
on the good news in both reports.
The Dow Jones industrial
average rose more than 113 points in afternoon trading.
"The recovery in the
labor market is maintaining its momentum," says Michael
Gapen, an economist at Barclays Capital.
That's noteworthy for an
economy faced with a debt crisis in Europe and, as recently
as last summer, scattered predictions of a second recession
at home.
There was plenty of reason
for gloom. A political standoff over the federal borrowing
limit brought the United States to the brink of default and
cost the nation its top-drawer credit rating.
Most analysts now say another
recession is unlikely.
The economy likely grew at an
annual rate of 3 percent or more in the final three months
of this year, analysts say. That would top the 1.8 percent
growth rate in the July-September quarter, and the 0.9
percent growth rate in the first half of the year.
Employers have added an
average of 143,000 net jobs a month from September through
November. That's almost double the pace for the previous
three months. Although it's below the pace from the first
quarter of 2011,
Next year should be even
better for hiring. The Associated Press surveyed 36
economists this month who said they expect the economy to
generate an average of about 175,000 jobs per month in 2012.
That's almost double the pace for the previous three months,
but not as high as job growth in the first quarter of the
year.
Job listings website
Indeed.com says its revenue has more than doubled in the
past year as companies spend more on recruiting. CEO Paul
Forster says the healthcare, energy and
information-technology sectors have the greatest increase in
job openings.
More small businesses plan to
hire than at any time in three years, a trade group said
earlier this month. And a separate private-sector survey
found more companies are planning to add workers in the
first quarter of next year than at any time since 2008.
Consumers are also growing
more confident. The Conference Board said Tuesday that its
consumer confidence index rose to 64.5 in December, the
highest reading since April.
Still, the economy and job
market remain vulnerable to setbacks.
Economists view Europe as the
biggest threat to the global economy in 2012. Europe is
expected to fall into recession as banks reduce lending and
countries cut spending and raise taxes in response to a
simmering government-debt crisis.
In the worst case, a
government default could destabilize the eurozone financial
system and trigger a global panic.
Economists are also concerned
that consumer spending in the U.S. could taper off if wages
— which did not keep up with inflation in 2011 — do not
rise faster or if families decide to purchase less on
credit.
In November, the unemployment
rate fell to 8.6 percent from 9 percent to its lowest level
since March 2009. About half that decline was attributed to
the 315,000 people who gave up looking for work. When people
stop looking for a job, the government no longer counts them
as unemployed.
Economists surveyed by the AP
predict the unemployment rate will fall to 8.4 percent by
Election Day.
About 7.2 million people are
receiving unemployment benefits. Congress agreed last week
to keep the emergency benefits that half of them depend on
for another two months, instead of letting them lapse at the
end of this year.
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