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Unemployment fell to 8.5 percent last month
-- the lowest level in nearly three years -- after a sixth straight month of solid hiring. Economists predict that 155,000 net jobs were created in January, according to a survey by Factset. Some are even estimating closer to 200,000. The unemployment rate is expected to stay unchanged. Still, the economy remains weak. The government said Friday that the economy grew at an annual rate of 1.7 percent last year
-- roughly half the growth of 2010. Overall growth last quarter -- and for all of last year -- was slowed by the sharpest cuts in annual government spending in four decades. And many people are reluctant to spend more or buy homes. Many employers remain hesitant to hire, even though job growth has strengthened. The outlook for 2012 is slightly better. The Federal Reserve has estimated economic growth of roughly 2.5 percent for the year, despite abundant risk factors: federal spending cuts, weak pay increases, cautious consumers and the risk of a European recession. The savings rate increased to 4 percent of after-tax incomes in December, up from 3.5 percent in November. For the year, the savings rate dipped to 4.4 percent from 5.3 percent in 2010. The savings rate had fallen to 1.5 percent in 2005, reflecting a housing boom that made people feel like spending more and saving less. The December report showed that prices tied to consumer spending edged up 0.1 percent in December and were up 2.4 percent compared to a year ago. This is the preferred inflation measure for the Federal Reserve. The Fed last week established an annual inflation target of 2 percent.
[Associated
Press;
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