It turns out, the fears were overblown. In the midst of the budget fight late last year, employers kept hiring.
And Friday's jobs report showed that average hourly wages â¿¿ up 4 cents to $23.78 in January â¿¿ were staying ahead of inflation. They had generally failed to keep up with prices since the recession ended in June 2009.
The steady hiring gains should help cushion the economic pain from higher Social Security taxes, which last month began shrinking most workers' take-home pay. A person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.
Analysts expect the Social Security tax increase to shave about a half-point off economic growth in 2013, because consumers drive about 70 percent of economic activity.The hit to consumers is coming at a precarious time. The economy contracted in the fourth quarter of 2012 for the first time in 3Â½ years. The drop was due mainly to a steep cut in defense spending and declining exports. Most analysts think those factors will prove temporary and that the economy will grow this quarter and the rest of the year. Friday's report did serve as a reminder that unemployment has been stuck at 7.8 percent or more since September. The rate would be even higher if many Americans hadn't retired or stopped looking for work. The proportion of the adult population that is working or looking for work is near a 32-year low. If labor force participation were still at its prerecession level, unemployment could exceed 11 percent. And despite the consistent hiring gains, the job market has a long way to go to fully heal from the recession. Between January 2008 and February 2010, the United States lost 8.7 million jobs. Since then, it's regained 5.5 million â¿¿ 63 percent of the lost jobs.