Hiring through the rest of 2012 will lag the brisk pace set early this year. But it will be strong enough to push the unemployment rate below 8 percent by Election Day.
That’s the view from an Associated Press survey of 32 leading economists who foresee a gradually brighter jobs picture. Despite higher gas prices, Europe’s debt crisis and a weak housing market, they think the economy has entered a “virtuous cycle” in which hiring boosts consumer spending, which fuels more hiring and spending.
The survey results come before a report today on hiring during April. The April report is eagerly awaited because employers added surprisingly few jobs in March. That result contributed to fears that the economy might struggle to sustain its recovery.
But the economists think the recovery will manage to reduce unemployment to 7.9 percent by Election Day from 8.2 percent in March.
Falling unemployment would boost President Barack Obama’s prospects in November. Going back to 1956, no president has lost re-election when the unemployment rate dropped in the two years before the election. And none has won when the rate rose over that time.
Unemployment was 9.8 in November 2010. If the surveyed economists prove correct, the rate will be nearly 2 percentage points lower when Americans vote on Nov. 6.
Yet the survey suggested it will be at least three more years before unemployment falls below 6 percent, which would be a sign of a healthy economy.
They predict the economy will grow 2.5 percent this year, up from 1.7 percent in 2011. In a healthy economy, 2.5 percent annual growth is usually adequate. Not so when 12.7 million people are unemployed. The economy would have to grow about 4 percent for a year to lower unemployment another percentage point.
The economists expect job growth to average 177,000 a month from April through June and 189,000 in the second half of the year. That would be down from an average 212,000 jobs added monthly from January through March. Last year, job growth averaged 158,000 a month.
“The job market is improving enough that consumer spending can grow at a moderate pace as opposed to an anemic pace,” says Phillip Swagel, a University of Maryland economist. “Businesses are finally confident enough to hire and invest.”
The AP survey collected the views late last month of private, corporate and academic economists on a range of indicators.
One sign of the still-tough job market is long-term unemployment: Forty-three percent of the unemployed — 5.3 million Americans — have been out of work six months or more. Most of the economists blame weak customer demand. Only about a third think the main reason is a mismatch between the skills workers have and the skills employers need.
Meanwhile in separate reports Thursday:
• The number of people seeking unemployment benefits fell last week by the most in nearly a year. The figure was a hopeful sign that hiring could pick up in coming months.
The Labor Department said that weekly unemployment aid applications fell 27,000 last week to a seasonally adjusted 365,000. The four-week average, a less volatile measure, ticked up to 383,500 last week.
Applications are a measure of the pace of layoffs. When they fall below 375,000, it generally suggests that hiring will be strong enough to lower the unemployment rate.
• Mortgage rates for 30-year fixed U.S. loans fell to a record low, reducing borrowing costs as concerns about the U.S. economic recovery and euro-region unemployment drove investors to the safety of government bonds.
The average rate for a 30-year mortgage fell to 3.84 percent in the week ended Thursday from 3.88 percent, Freddie Mac said in a statement. It was the lowest in the McLean, Va.-based mortgage-finance company’s records dating to 1971. The average 15-year rate dropped to 3.07 percent from 3.12 percent.