WASHINGTON (AP) — Wait — 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.
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For reasons ranging from progress on Europe’s debt crisis to a slowly improving housing market to slightly less gridlock in Congress, the economy and the job market appear better able to withstand setbacks than they were in 2011.
“The internal dynamics of the U.S. economy look pretty good right now,” says 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. The unemployment rate remained 8.3 percent, but it was 9 percent as recently as September. By all measures, the job market is strengthening by the month.
Then again, the numbers can conjure an unsettling sense of déjà 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.
Helping drive that growth was a new Social Security tax cut that put more money in paychecks for 160 million Americans. The tax cut gives $1,000 a year, or nearly $20 a week, to someone making $50,000. It gives up to $4,272 or roughly $82 a week, to a household with two high-paid workers.
The Social Security tax cut was supposed to expire at the end of 2011. But under election-year pressure, Congress has extended it through 2012.
On top of that, a bond-buying program by the Federal Reserve drove interest rates on mortgages and other consumer loans to historic lows.
Yet just as things were perking up, a freeze descended on the economy and job market.
The March 11 earthquake and tsunami cut off supplies from Japanese factories to U.S. and other manufacturers. The Arab Spring protests escalated oil prices. And gasoline prices followed them up, to a painful $3.98 a gallon by mid-May.
A clash in Washington over the federal debt limit brought the nation to the verge of default and sapped consumer and business confidence. Europe’s debt crisis panicked investors and further shook confidence.
From May through August last year, job growth averaged less than 80,000 a month before regaining strength in the fall.
Economists expect the 2012 sequel to improve on the 2011 original. Here are seven reasons the job market appears on surer footing this time:
— COMPANIES CAN’T SQUEEZE MORE OUTPUT FROM WORKERS
During and right after the Great Recession, companies shrank their work forces because demand plunged and fewer workers were needed.
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.
“Consumer finances are fundamentally healthier than they were,” says Stuart Hoffman, chief economist at PNC Financial Services Group.
As the labor market has healed, Americans have worried less about losing their jobs. As a result, they’re less likely to curtail spending — even in the face of shocks such as a 29-cent jump in gasoline prices in the past month to an average $3.78 a gallon.