Economy starts strong in 2012, with fewer layoffs, lower inflation, busier factories

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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.

LOCAL JOBS REPORT

Seasonal layoffs lifted the number of first-time claims for unemployment insurance benefits in the Augusta metro area in December, the Georgia labor department reported Thursday.

There were 2,541 claims last month, similar to December 2010, when 2,434 filed claims. The December numbers represent an increase over November’s 1,981 initial claims.

The number also rose statewide, the department reported, to 63,714, up 10.7 percent, from 57,573 in November. For Georgia, the number was 15 percent lower than the number of claims filed in December 2010.

– From staff reports


COUNTY-BY-COUNTY INITIAL CLAIMS

Richmond County: 1,472 in December, up from 1,148 in November, down from 1,492 in December 2010

Columbia County: 428 in December, up from 328 in November, down from 447 in December 2010

Burke County: 212 in December, up from 189 in November, down from 224 in December 2010

McDuffie County: 404 in December, up from 268 in November, up from 234 in December 2010

(South Carolina counties will be reported when data is released)


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