By Lucia Mutikani ,Reuters
WASHINGTON — The U.S. economy is gaining momentum and should push through next year with only a few bruises despite an almost certain European recession and slower global growth.
A firming in the anemic U.S. labor market should put the economy in reasonable shape to withstand headwinds from overseas, although the recovery will likely slow at the start of the year after a surprisingly solid fourth quarter. “The U.S. economy will be one of the better stories in an otherwise gloomy global economy next year,” said Sung Won Sohn, an economics professor at California State University in the Channel Islands. “It will not go into recession.” Data from employment to manufacturing imply U.S. growth will top a 3 percent annual rate in the fourth quarter, which would be the fastest pace in 18 months.
Much of that expansion reflects the release of pent-up demand for autos and a restocking of inventories by businesses, temporary factors that could lead to a lull early in 2012. But a healing labor market provides a signal of a more-lasting and fundamental strengthening of the recovery. The jobless rate fell to a 2-1/2-year low of 8.6 percent in November and first-time claims for jobless benefits have dropped to the lowest level since early 2008. That’s good news for the consumers who drive two-thirds of U.S. economic activity.
“The consumer is going to be able to spend simply because job growth is picking up,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “As job growth picks up, income picks up.”