WASHINGTON — The economy is off to a fast start in 2012.
The outlook for hiring has brightened as applications for unemployment benefits near a four-year low.
Adding to the optimism, inflation remains low, business travel is up and the home market is showing slight gains after three dismal years.
That’s the picture sketched by a flurry of data Thursday. It followed other reports that show the economy began the year with vitality: Companies are hiring more, consumer confidence is up, more people are buying cars and factories are making more goods. Even bank lending, which all but froze during the depths of the financial crisis, is on the rise.
Many economists caution that it’s too early to conclude that the recovery is accelerating.
“There’s no doubt that the economy is getting better; we just shouldn’t get carried away,” Mark Vitner, an economist at Wells Fargo, said. “We haven’t shifted into a higher gear.”
Despite six months of solid job growth, unemployment remains painfully high at 8.5 percent. And inflation-adjusted wages fell over the past year.
Housing is still slowing the economic recovery. And a recession in Europe would weaken growth in the U.S. and elsewhere.
A recovery hinges on strong job growth. Hiring was solid in the final six months of last year, capped by December’s net increase of 200,000 jobs.
The job market still has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. More than 13 million people remain unemployed. Millions more have given up looking for work and so are no longer counted as unemployed.
And wages aren’t keeping up with inflation. Average inflation-adjusted hourly earnings dropped 0.9 percent last year. Without more jobs and higher pay, consumers might have to cut back on spending.
In December, home builders ended their third straight year of dismal home construction. Signs of improvement surfaced in the final three months of 2011, when builders started more single-family homes.