Reuters (03/22/12) Lucia Mutikani
Economists say the recent acceleration in U.S. job growth could create a virtuous cycle, generating additional income for more Americans and leading to increased spending, faster growth, and further hiring. On an annualized basis, the 734,000 jobs created over the past three months probably generated about $360 billion in additional income, when taking into account the modest rise in hourly earnings and longer working hours.
Strong job growth and healthy income gains have been the missing ingredients in the recovery from the 2007-09 recession. While growth in per capita wages is still restrained by the huge number of Americans hunting for work, the situation should improve as the labor market strengthens. “With employment gains starting to accelerate, it’s certainly something that will push income growth to be more consistent with employment growth, and therefore it creates a virtuous cycle that we are all waiting for,” says Torsten Slok, a senior economist at Deutsche Bank in New York. Every gain of 100,000 in payrolls should lead to monthly income growth of 0.2% to 0.3%, according to Millan Mulraine, senior macro strategist at TD Securities in New York.