Economy is making steady gains despite weak hiring

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Published: December 6,2010

WASHINGTON — The economy is starting to fire on almost every cylinder these days but the one that matters most: Job creation.

Factories are busier. Incomes are rising. Autos are selling. The holiday shopping season is shaping up as the best in four years. Stock prices are surging.

And many analysts are raising their forecasts for the economy’s growth. Goldman Sachs, for instance, just revised its gloomy prediction of a 2 percent increase in gross domestic product in 2011 to 2.7 percent and forecast 3.6 percent growth for 2012.

“The upward momentum has more traction this time,” says James O’Sullivan, chief economist at MF Global.

If only every major pillar of the economy were faring so well.

Despite weeks of brighter economic news, employers still aren’t hiring freely. The economy added a net total of just 39,000 jobs in November, the government said Friday.

That’s far too few even to stabilize the unemployment rate, which rose from 9.6 percent in October to 9.8 percent last month. Unemployment is widely expected to stay above 9 percent through next year, in part because of the still-depressed real estate industry.

Job creation ultimately drives the economy, and it remains the most significant weak link.

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