Further strong hiring gains will hinge, in part, on healthy consumer spending. So far, higher gas prices and a Jan. 1 increase in Social Security taxes haven't caused Americans to sharply cut back on spending.
Across-the-board government spending cuts also kicked in March 1 after the White House and Congress failed to reach a deal to avoid them. Those cuts will likely lead to furloughs and layoffs in coming weeks.
The Congressional Budget office has estimated that the cuts mean government spending will drop $44 billion in the budget year that ends Sept. 30. That reduction, slightly more than 1 percent of federal spending, will likely hold down hiring in spring and summer, Sweet says. But more hiring and pay increases now should ease the blow.
A big source of strength has been home sales and residential construction: New-home sales jumped 16 percent in January to the highest level since July 2008. And builders started work on the most homes last year since 2008.Home prices rose by the most in more than six years in the 12 months that ended in January. Higher prices tend to make homeowners feel wealthier and more likely to spend. So do record-high stock prices. "If my house is worth a little more, my 401(k) is going up ... maybe I can afford to go buy that car, or continue to spend," says Ed Hyland, investment specialist at JPMorgan Private Bank. ___ AP Business Writers Paul Wiseman in Washington and David McHugh in Frankfurt, Germany, contributed to this report.