WASHINGTON – The United States is starting the year on a positive note, a sign that investors may be too gloomy.
Payrolls rose 200,000 in December, double the gain in November.
Four painful years after the recession struck and wiped out 8.7 million jobs, the U.S. may finally be in an elusive pattern known as a virtuous cycle – an escalating loop of hiring and spending.
A burst of hiring drove the unemployment rate down to 8.5 percent, its lowest in almost three years, officials said Friday, leading economists to conclude that the improvement in the job market might just last.
“There is more horsepower to this economy than most believe,” said Sung Won Sohn, an economics professor at California State University, Cshannel Islands. “The stars are aligned right for a meaningful economic recovery.”
It was the sixth month in a row that the economy added at least 100,000 jobs, the longest streak since 2006. The economy added jobs every month last year, the first time that has happened since 2005.
And the unemployment rate, which peaked at 10 percent in October 2009 and stood at 9.1 percent in August, has fallen four months straight. It was 8.7 percent in November.
If economics textbooks and the best hopes of millions of unemployed Americans are confirmed, the virtuous cycle may be under way, which would suggest the job market will continue to strengthen.
When people are hired, they have more money to spend. That means greater demand for goods and services and results in businesses hiring even more people. And that results in even more spending and more hiring.
A weekly measure of consumer confidence ended 2011 at a five-month high.
And manufacturers reported their business in December grew at the fastest pace in six months. The combination indicates the world’s largest economy has enough staying power to withstand a recession in Europe and a slowdown in China.
But on Friday, stock indexes teetered between small gains and losses all day as traders fretted about Europe’s ongoing financial drama.
Bob Doll, chief equity strategist at BlackRock Inc., the world’s biggest asset manager, sees U.S. stock prices rising and yields on Treasury securities climbing this year as investor concerns about the outlook abate.
He forecasts that U.S. stocks will return at least 10 percent in 2012, beating foreign markets for a third year, as the nation’s gross domestic product expands by as much as 2.5 percent. GDP grew 1.8 percent last year, according to the median forecast of economists surveyed by Bloomberg News last month.
