Outlook for 2011 US economy is brightening.

Employers will hire more workers this year, and the economy will grow faster than envisioned three months ago, according to an Associated Press survey that found growing optimism among leading economists.

But unemployment will stay chronically high — nearly 9 percent by year's end, the latest quarterly AP Economy Survey shows. A majority of economists say it will be 2016 or later before unemployment drops to a historically normal rate of around 5 percent.

Economists have become more confident 19 months after the worst recession since the Great Depression ended. Lower Social Security taxes and higher stock prices will embolden Americans to spend more and help power the economy, they say.

"People will finally recognize that an economic recovery is under way," said Lynn Reaser, a board member of the National Association for Business Economics. "This won't be a recovery seen only by economists."

The gains this year will be enough to withstand the threats still clouding the economy, the AP survey found. A majority of the economists doubt, for example, that falling home prices and higher mortgage rates will pose a major risk to the economy in 2011.

The AP survey collected the views of 42 private, corporate and academic economists on a range of indicators. Among their forecasts:

• The economy will grow 3.2 percent this year, compared with the 2.7 percent they forecast in October. That would top last year's estimated growth of less than 3 percent.

• Employers will create a net total of 2.2 million jobs. Three months ago, the economists predicted 1.6 million jobs would be added in 2011. Last year, employers added roughly 1.1 million.

• Consumers will spend 3.2 percent more this year than last year. That's stronger than the 2.5 percent growth the economists had forecast in October. And it's nearly double the spending growth that's estimated for 2010.

• Inflation will be 1.8 percent this year, barely more than the 1.7 percent the economists forecast in the previous survey and up only slightly from 1.5 percent last year. The 1.8 percent forecast falls within the range of inflation the Federal Reserve thinks a healthy economy needs.

Among the reasons for the economists' growing optimism: an extension of income-tax cuts, a cut in Social Security taxes for workers, easier access to loans, higher stock prices and a government that seems more sympathetic to the priorities of businesses.

The brighter outlook is also evident among people responsible for hiring.

Jerry Huddleston, human resources manager of the Ozark Natural Foods grocery store in Fayetteville, Ark., said he plans to hire for busy weekend shifts because sales are improving.

The store is generally slow to add jobs. But Huddleston said business is picking up. Customers seem more willing to pay more for organic milk, vitamin supplements and pre-made vegetarian meals.

"I think people are starting to be more confident that the job they have is the job they will have tomorrow," he said.

As the economy gradually strengthens, the economists expect interest rates will tick up, as they already have begun to do. They think the yield on the 10-year Treasury note, now at 3.4 percent, will reach 3.6 percent by midyear and 3.9 percent by year's end. Those higher rates would force up mortgage rates, which tend to track the 10-year Treasury yield.

Yet when asked about a range of threats — from falling home prices and rising energy prices to state budget woes and Europe's debt crisis — the economists called each a minor risk rather than a major risk to the economy.

In the spring and summer, many analysts had feared the economy might slide back into a "double-dip" recession.

"Consumers and businesses are in a better mood," said Nariman Behravesh, chief economist at IHS Global Insight. "They are spending a little more freely. Not a lot more freely, but a little more freely."

That helps explain why Behravesh has lifted his forecast for economic growth in 2011 to 3.2 percent, from 2.2 percent in October.

Still, the Fed said Wednesday that the economy isn't growing fast enough to lower unemployment and still needs help from the Fed's $600 billion Treasury bond-purchase program. The bond purchases are intended to lower rates on loans and boost stock prices, spurring more spending and invigorating the economy.

President Barack Obama still faces risks from voters skeptical of his economic stewardship, according to a new Associated Press-GfK poll. More than half disapprove of how he's handled the economy. Just 35 percent say it's improved on his watch; 40 percent had said so a year ago.

Yet public sentiment may brighten if the economists prove correct in their forecasts. Rajeev Dhawan, director of Georgia State University's Economic Forecasting Center, has raised his estimate for growth this year to 2.7 percent, from 1.8 percent three months ago.

This year "will be better than 2010 in terms of hiring, spending and economic growth," Dhawan said. "Yet unemployment will decline only slowly. At least we're not going backward."

Dave Lindahl Scam

US economic growth

US economic growth revised up to 2.6% for third quarter.

The US economy grew at an annualised pace of 2.6% in the third quarter of 2010, slightly faster than the previous estimate of 2.5%, figures have shown.

However, the rate was lower than expectations, with some analysts expecting a figure closer to 3%.

Earlier this month, the US Federal Reserve said the US recovery was still too slow to bring down the country's high level of unemployment.

Separately, figures showed home sales continuing to recover.

Sales of previously-owned homes rose by 5.6% in November compared with the previous month, to a seasonally adjusted annual rate of 4.68 million units last month, according the National Association of Realtors.

However, the increase was less than analysts had hoped for, and overall sales were down 27.9% from a year ago.

The GDP data from the Commerce Department showed that the third-quarter growth rate was revised up after an increase in the pace of businesses building up inventories.

However, this increase was offset by a downward revision to consumer spending, which grew at an annual pace of 2.4% in the quarter, down from a previous estimate of 2.8%.

Consumer spending is watched closely as it accounts for about 70% of the US economy's total economic output.

"Clearly the economy continues to improve and grow but at a slow, modest pace and that is restraining employment growth and a recovery in the housing market," said Tim Ghriskey, chief investment officer at Solaris Asset Management.

Figures released earlier this month showed the unemployment rate in the US rising to 9.8%, its highest rate since April.

High unemployment, along with a weak housing market, is undermining economic growth.

'Employment growth'

Last month, the Fed said it would pump $600bn (£390bn) into the economy.

The policy, dubbed QE2 because it is the second round of quantitative easing, is designed to boost the economy's fragile recovery.

The government has also done its part to stimulate growth, by extending tax cuts enacted by President George W Bush that were set to expire this year.

However, some analysts argue that there may be some reason for cheer in the current quarter.

"More recent data suggests we're seeing reasonably healthy retail sales growth, pretty healthy investment spending [and] some growth in employment," said Zach Pandl at Normura Securities in New York.

Read more:

US economic growth

The US economic recovery is still too slow to bring down the country's high level of unemployment, the Federal Reserve has warned.

The central bank made the comment as it reaffirmed its commitment to continue purchasing $600bn (£380bn) in bonds to stimulate the economy.

The Federal Reserve also kept US interest rates on hold at between 0% and 0.25%, as had been widely expected.

US unemployment hit 9.8% in November, its highest level since April.

Just 39,000 jobs were created last month, down from 172,000 in October, meaning 15.1 million people were without work.

The US unemployment rate has now been above 9% for 19 months, the longest stretch on record.

The most recent data showed that the US economy grew by an annualised rate of 2.5% between July and September.

However this is not sufficient growth to allow job creation to keep up with the growing US working-age population.

The Fed's latest $600bn stimulus package was announced at the start of November.

The central bank had already pumped $1.75tn into the economy since the recession.

1 in 7 Americans live in poverty

1 in 7 Americans live in poverty: US Census.

Poverty Rate Climbs in Recession, One in Seven Now Poor.

The Census Bureau in America has reported that the number of Americans living in poverty jumped to 14.3 percent in 2009, with the ranks of working-age poor reaching the highest since at least 1965.

About 43.6 million people, or 1 in 7, were in poverty. That is up from 39.8 million, or 13.2 percent, in 2008.

The number of people lacking health insurance rose from 46.3 million to 50.7 million, due mostly to the loss of employer-provided health insurance during the recession. Congress passed a health overhaul law earlier this year.

The statistics released Thursday cover President Barack Obama's first year in office, when unemployment climbed to 10 percent in the months after the financial meltdown.

The median - or midpoint - household income was $49,777.

US economic growth modest

US economic growth modest, says Fed's Beige Book

The US economy has continued to grow this year, but only at a "modest" pace, according to the Federal Reserve's influential Beige Book.

Despite a "slight improvement" in consumer spending, growth was hampered by "severe snowstorms" in many parts of the country, it found.

The book also reported labour markets remaining weak across the country.

But the book did highlight growth in the manufacturing sector, and an increase in demand for services.

"Manufacturing activity strengthened in most regions, particularly in the hi-tech equipment, automobile and metal industries," it said.

The report painted a more downbeat picture of the property sector and the jobs market.

"Most districts characterised commercial real estate and construction activity as weak or having declined further," it said.

And although some districts "reported an uptick in hiring or a slowdown in layoffs, labour markets generally remained soft throughout the nation".

Leading US stocks lost early gains sparked by Greece's additional austerity measures after the book was published.

The main Dow Jones index closed down 9 points, at 10,396.76.

The Beige Book, compiled eight times a year and used to help set interest rates, is based on a survey of business views from around the US.

Last week, revised figures showed that the US economy grew at an annualised rate of 5.9% in the last three months of 2009, faster than the preliminary estimate of 5.7%.

US Economy grew faster in 4Q of 2009

Economy likely grew faster in 4Q, but fears remain.

January 29 2010 : Economy likely grew faster in 4th quarter, but concerns linger about recovery's staying power.

At the end of last year, the economy likely grew for the second straight quarter -- possibly at the fastest pace in nearly four years.

So the recession has ended, right? Yes, say most economists. But a panel of academics who officially decide such matters has offered a different response: silence.

That's despite signs that the economy, juiced by government aid, has begun to hum rather than sputter. On Friday, the government is likely to go further: it's expected to say growth accelerated from October through December.

The housing market, the collapse of which triggered the recession, is creeping back. Industrial production is up. Layoffs have slowed, though companies remain reluctant to hire.

Analysts surveyed by Thomson Reuters estimate the economy grew 4.5 percent in the final three months of 2009. If so, it would mark the best quarterly performance since 2006. Some predict even more dynamic growth -- possibly hitting 6 percent, a level not reached since 2003.

But many analysts worry that growth could slow or even stop in coming months. They point to temporary factors that propped up the economy in the fourth quarter but will eventually fade.

Much of the fourth-quarter expansion was due to government stimulus and to companies boosting output to restock supplies depleted by the recession. Such inventory restocking boosts production not only at manufacturers but also at their suppliers. That ripple effect can help boost an entire chain of related industries.

Economists estimate two-thirds to three-quarters of the fourth quarter's growth came from the inventory cycle, as companies shifted from sharply cutting stockpiles to rebuilding them or only slightly reducing them.

An increase in inventories, or even just a much slower rate of decline, means companies are producing more goods to fill orders and not shrinking their existing stockpiles.

But government stimulus will eventually be withdrawn. Inventory replacement, too, ends, unless demand picks up. And when it ends, so will the production gains that companies and their suppliers enjoy.

For now, the swing is benefiting companies large and small, up and down the supply chain. AK Steel Holding Corp. said this week that greater demand for steel from automakers and other customers drove a better-than-expected fourth quarter profit.

That's why few think the expansion seen in the fourth quarter can last. Some even fear the recovery might collapse into a "double-dip" recession.

In the meantime, the National Bureau of Economic Research, the group based in Cambridge, Mass., that determines the start and end of recessions, has said nothing about the latest one having ended.

Many economists predict growth will slow to a pace of around 2.5 percent in the current quarter. High unemployment is likely to make consumers cautious, leading to subdued spending in the months ahead.

"The all-important consumer is expected to take a pause," predicts Tom Porcelli, economist at RBC Capital Markets Corp.