Economy ends tough 2011 on a surprising upswing
By Paul Wiseman The Associated Press December 25, 2011 7:44PM
File - In this Nov. 26, 2011 file photo, consumers put down their bags for a rest in Herald Square, in New York. The U.S. economy is ending 2011 on a roll. Growth in the fourth quarter likely accelerated to the fastest pace since mid-2010, and the job market appears to be strengthening. (AP Photo/John Minchillo, File)
Updated: January 27, 2012 8:10AM
WASHINGTON — The economy is ending 2011 on a roll.
The job market is healthier. Americans spent lustily on holiday gifts. A long-awaited turnaround for the depressed housing industry appears to be under way. Gas is cheaper. Factories are busier. Stocks are higher.
Not bad for an economy faced with a debt crisis in Europe and, as recently as this summer, scattered predictions of a second recession at home. Instead, the economy has grown faster each quarter this year, and the last three months should be the best.
“Things are looking up,” said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ.
When The Associated Press surveyed 43 economists in August, they pegged the likelihood of another recession at roughly one in four. The Dow Jones industrial average was lurching up or down by 400 points or more some days.
Most analysts now rule out another recession.
Analysts think the economy will grow at an annual rate of more than 3 percent from October through December, the fastest pace since a 3.8 percent performance the spring of 2010.
Many economists still worry that the year-end surge isn’t sustainable, in part because the average worker’s pay is barely rising. And Europe already may be sliding into a recession that will infect the United States.
Yet for now, the economy is on an upswing that few had predicted:
The number of people applying for unemployment benefits came in at 366,000 last week, down from a peak of 659,000 in March 2009. Even in good economic times, the figure would be between 280,000 and 350,000.
Employers have added at least 100,000 jobs five months in a row, the longest streak since 2006. And the unemployment rate fell from 9 percent in October to 8.6 percent last month, the lowest since March 2009.
Small businesses are hiring again, too, according to the National Federation of Independent Business.
Business is up at AG Salesworks in Norwood, Mass., which helps technology companies such as Motorola find new customers. The firm has hired 26 workers to restore its staff to 56, erasing the job cuts from the recession. CEO Paul Alves plans to add an employee or two a month as long as growth continues.
“I do see more confidence than I saw 12 months ago,” Alves said. “But it’s good, not great. Robust isn’t the word I’d use.”
The holiday shopping season has turned out better than anyone expected. Sales from November through Saturday were up 2.5 percent. Americans have spent $32 billion online, 15 percent more than a year ago. Retails sales were up in November for the sixth month in a row. People are spending, in particular, on clothes, cars, electronics and furniture.
Americans felt better about the economy in November than they had since July, according to the Conference Board, a business group that tracks the mood of consumers.
The board’s consumer confidence index climbed 15 points to 56 in November, the biggest one-month jump since April 2003. During the Great Recession, the index fell as low as 25.
“It seems like the confidence of the traditional American consumer is higher right now,” said Jim Newman, executive vice president of operations at the digital marketing company Acquity Group, which recently added 100 jobs.