The nation’s on-and-off economic recovery has picked up its pace again, the Commerce Department reported Friday, with the U.S. economy growing at an annualized rate of 2.8 percent for the end of 2011.
That rate is the fastest recorded in a year and a half, and follows three quarters of growth below 2 percent. Over all of 2011, the economy grew at a rate of 1.7 percent.
The recent growth came from companies building up their inventories and from an uptick in consumer spending, which accounts for more than two-thirds of the economy.
But while the nation’s gross domestic product, with its growth this year, now exceeds its size before the recession, employment numbers continue to lag behind their pre-recession levels, and this disconnect continues to lead to a sense of gloom for many households.
The employment level is still down about 6 million from its peak of about 146 million just before the downturn.
“That’s why people feel we’re still in recession,” said Gus Faucher, senior economist at PNC Financial Services.
Many firms, though profits are high, are reluctant to hire.
“Businesses have just been really really scared by what we’ve been through,” Faucher said. “Once they’re convinced things wont go to hell again, there will be some demand for labor.”
“We’re getting close to that point,” Faucher said.
The GDP growth of 1.7 percent in 2011 is slower than that of 2010, when it was 3 percent. At the beginning of 2011, many economists had predicted a year of stronger growth. But a combination of the earthquake in Japan, the monetary troubles in Europe and the debt ceiling standoff in Congress put the economy off course, economists said.
Now many forecasters are fearful of being too optimistic.
“Even though things feel better at the moment people don’t want to make the same mistake,” said Mark Zandi, chief economist at Moody’s Analytics. “The forecasts are much more cautious. This collective psyche is very fragile.”
Moreover, the European crisis, looms as a potential source of trouble. And the news about U.S. housing continues to put a drag on the nation’s outlook.
“As long as home prices are falling, and they still are, its hard to get enthusiastic about anything,” Zandi said.
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