As optimism mounts that the U.S. economic recovery is at last gaining steam, it is worth remembering that things looked pretty good a year ago, too. In the early months of 2011, the unemployment rate fell to its lowest level in close to two years. Growth was picking up, propelled by consumers who were finally opening their wallets. Incomes were rising while inflation remained modest. Most economists expected the momentum to continue through the year.Events, of course, turned out differently. Turmoil in the Middle East sent oil prices soaring, eating into consumers’ paychecks. An earthquake and tsunami in Japan disrupted supply chains around the world. A sovereign-debt crisis in Europe roiled global markets, while debt-ceiling brinksmanship in Washington shook confidence in the U.S. government. Job creation and economic growth nearly ground to a halt, before finally picking up near the end of the year. “Even the modest degree of optimism that we had turned out to be too much,” said Tim Gill, director of economic analysis for NEMA, a manufacturing trade group. “We’re seeing a little bit of a repeat of history here.”
By Ben Casselman and Phil Isso, Feb. 13, 2012 WSJ

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02/13/12 WSJ