WASHINGTON -- Four painful years after the Great Recession struck and wiped out 8.7 million jobs, the United States finally might be in an elusive pattern known as a virtuous cycle -- an escalating loop of hiring and spending.
The nation added 200,000 jobs in December in a burst of hiring that drove the unemployment rate down two notches to 8.5 percent, its lowest in almost three years, and led economists to conclude that the improvement in the job market might last.
"There is more horsepower to this economy than most believe," said Sung Won Sohn, an economics professor at California State University, Channel Islands. "The stars are aligned right for a meaningful economic recovery."
It was the sixth month in a row that the economy added at least 100,000 jobs.
The economy added jobs every month last year, the first time that has happened since 2005.
And the unemployment rate, which peaked at 10 percent in October 2009 and was 9.1 percent in August, has fallen four months straight. It was 8.7 percent in November.
If economics textbooks and the best hopes of millions of unemployed Americans are confirmed, the virtuous cycle might be under way.
When people are hired, they have more money to spend. That means greater demand for goods and services and results in businesses hiring even more people. That results in even more spending and hiring.
"The labor market is healing," said Diane Swonk, chief economist at Mesirow Financial who also cautioned, "We still have a long way to go --years -- to recoup the losses."
The economy added 1.6 million jobs for all of 2011, up from the 940,000 added during 2010. In 2009, the most bruising year of the recession, the nation lost more than 5 million jobs.
It will take 6 million more jobs to get the United States back to what it had in December 2007, when the recession began. Economists forecast that the nation will add almost 2 million this year.
The report painted a picture of a broadly improving job market. Average hourly pay rose by 4 cents. The average workweek lengthened by six minutes, a sign that business is picking up and more companies might soon need to hire.
The private sector added 212,000 jobs in December, a gain that was offset by 12,000 layoffs by governments.