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2012 job outlook is rosier than in 2011

WASHINGTON -- Haven't we seen this movie before?

Companies are generating waves of jobs, and unemployment is down.

The same thing happened last year around this time. Then everything faded to black starting with the earthquake in Japan, which struck a year ago Sunday.

Does a happier ending await the job market this time? Economists seem to think so.

"The internal dynamics of the U.S. economy look pretty good right now," said Bill Cheney, chief economist at John Hancock Asset Management.

U.S. employers added 227,000 jobs in February, the third straight month of 200,000-plus job growth. Unemployment remained 8.3 percent, but it was 9 percent as recently as September.

Then again, the numbers can conjure an unsettling sense of deja vu. Last year, the job market had a similar three-month run. From February through April, the economy added an average 239,000 jobs each month.

Yet just as things were perking up, a freeze descended on the economy and job market.

Economists expect the 2012 sequel to improve on the 2011 original.

Here are seven reasons the job market appears to be on surer footing this time.

Companies can't squeeze more output from workers. During and right after the Great Recession, companies shrank their workforces because demand plunged.

Once demand started growing again, companies were reluctant to hire immediately. They managed to produce more with the employees they had. But now many companies are finding they can't continue to do more with less. As demand grows, they're finding they have to hire.

Consumers are sturdier. Since the recession, households have cut their debts and rebuilt savings. One key measure of household debt burdens -- debt payments as a percentage of after-tax income -- is at its lowest point since 1994, according to the Federal Reserve.

As the labor market has healed, Americans have worried less about losing their jobs. As a result, they're less likely to curtail spending.

Tensions ease in Washington. The debt-limit showdown waged last summer between the Obama administration and congressional Republicans rattled confidence in America's leadership. It looked as if the United States might default on its debts for the first time in history.

Since then, thanks in part to election-year pressures, tensions have eased. Republicans dropped threats to let the payroll tax expire, and House lawmakers from both parties backed a bill last week to make it easier for small businesses to obtain financing they need to hire and expand.

Housing is inching back. The collapse of real estate lies at the heart of America's economic problems. Now there are tentative signs of recovery. Apartment construction is growing. Construction jobs are slowly returning. Home builders are gaining confidence that sales will pick up.

State and local government cuts are slowing. The Great Recession and the housing collapse dried up tax revenue for state and local governments. Many were forced to lay off teachers and other public workers.

But the cuts appear to be easing. State governments have added 10,000 jobs this year. Local governments added 2,000 last month, a modest total but only the third increase in two years.

Europe's threat has subsided. Investors panicked last year over the prospect that Greece and some other European countries would default on their debts, stick banks with huge losses and trigger a global credit crunch.

But confidence is rebounding. Greece has received a $172 billion bailout. And the European Central Bank has made more than $1.3 trillion in low-rate three-year loans to banks since December, making clear that it won't let the European banking system fail.

U.S. banks are lending more to businesses. After the September 2008 collapse of Lehman Brothers shook the financial system, U.S. banks cut loans to businesses in 2009 and 2010.

But banks are healthier now. So are the prospects for their business customers. Bank lending to businesses rose nearly 14 percent last year to $1.35 trillion, according to the Federal Deposit Insurance Corp.

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