If you look at the forecasts, Europe and the U.S. are starting 2012 off on different economic trajectories. Europe is heading for a near-inescapable second recession after manufacturing output dropped in December for the fifth straight month. The United States, on the other hand, seemed to be on the upswing in December-the job and housing markets improved, the payroll tax cut was extended (finally), and consumer spending rose. "There is a sense of decoupling," Maury Harris, chief economist at UBS Securities, told Bloomberg Businessweek. "We can still have a decent year here in the U.S. even with the rest of the world slowing down."
However, the good news is not without qualification. Job growth has increased, but 40 percent of the new jobs have been in low-paying sectors. Growth is projected at 2 percent for the first half of the year-down from an estimated 3.6 percent in the last quarter of 2011. And consumer spending-which makes up 70 percent of the economy-is still in the doldrums. The United States is in a better place than Europe right now, but it's important to remember that we're not insulated, and current forecasts may be too optimistic.
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Chart of the Day
Rates above zero on this chart mean that jobs are being created faster than workers are entering the economy. The current drop in unemployment is not due to people giving up their job search. As Matt Yglesias points out, "Improving from a low base is not the greatest achievement in the world," but as the graph shows, it's been a long few years since there have been jobs for the taking.
Reason to Get Out of Bed in the Morning
An innovative crowdsourcing initiative in Ecuador has raised $116 million to protect 722 acres of rainforest from oil exploitation.
-GOOD
