Economy

Even in good times, economics is considered the "dismal science. " In bad times, it's downright intolerable. During this long winter of financial crisis-induced economic gloom, the pronouncements of economists have made it sound as if summer remained years off. Economic growth weak, job growth moribund. While employment growth is considered a lagging economic indicator, an even more lagging indicator may be the viewpoints of professional forecasters themselves. The Federal Reserve Bank of Philadelphia released its latest quarterly Survey of Professional Forecasters last week and the results are practically cheerful by economists' standards.

WASHINGTON - President Obama will focus his State of the Union address on boosting job creation and economic growth at a time of high unemployment, underscoring the degree to which the economy could threaten his ability to pursue second-term priorities such as gun control, immigration policy, and climate change. Obama also may use Tuesday's prime-time address before a joint session of Congress to announce the next steps for concluding the war in Afghanistan by the end of 2014. Obama's State of the Union marks his second high-profile speech to the nation in about three weeks, after his inaugural address Jan. 21 that opened his second term.

WASHINGTON - The U.S. economy unexpectedly shrank from October through December, the first quarterly drop since 2009 and a reminder of the economy's vulnerability as automatic cuts in government spending loom. The Commerce Department said the economy shrank at an annual rate of 0.1 percent mainly because companies restocked at a slower rate and the government slashed defense spending. Those trends partly reflected uncertainty late last year about the fiscal cliff, which Congress averted in a deal reached Jan. 1. Economists say those factors could prove temporary, and the likelihood of another recession appears remote.

WASHINGTON - The U.S. economy is a study in contrasts. The housing, banking and auto industries are surging back to health, and that has helped push the stock market to a five-year peak. Higher prices for homes and stocks tend to make people feel wealthier and spend more. Yet, unemployment remains high and hiring modest. The end of a Social Security tax cut is shrinking already flat pay. Federal budget fights have put businesses and consumers on edge. Balanced between those tailwinds and headwinds, the economy is struggling to accelerate.

DAVOS, Switzerland - The crisis mood is gone, but that doesn't mean you can slip back into your old ways - that's the message from top international finance officials wrapping up the World Economic Forum in Davos, Switzerland. They warned governments Saturday against letting their relief over an improved economic climate turn into complacency over reforms that many want to see in order to sustain a still-uncertain recovery. "Do not relax," International Monetary Fund head Christine Lagarde urged at a closing panel on the economic outlook.

WASHINGTON - Outgoing Treasury Secretary Timothy Geithner thinks the U.S. economy will strengthen this year - as long as Congress avoids cutting spending too deeply in a budget deal and Europe's economy gradually improves. In an interview Friday on his last day in office, Geithner told the Associated Press, "The economy is stronger than people appreciate. " He said he agrees with many private forecasters that growth will accelerate this year, in part because the U.S. economy is no longer being held back by oil shocks and Europe's debt crisis has subsided.

BERLIN - The U.N. labor agency warns that the lingering effects of the global economic crisis means that unemployment will continue to rise - even though world economies are expected to pick up. The International Labor Organization (ILO) said in a report to be released Tuesday that the net number of unemployed people rose by 4 million in 2012 to 197 million overall. It is expected to rise by 5.1 million in 2013, and by another 3 million in 2014. According to ILO Director-General Guy Ryder, "An uncertain economic outlook, and the inadequacy of policy to counter this, has weakened aggregate demand, holding back investment and hiring.

WASHINGTON - Federal Reserve officials in 2007 underestimated the scope of the approaching financial crisis and how it would tip the U.S. economy into the worst recession since the Great Depression, transcripts of the Fed's policy meetings that year show. The meetings were held as the country was on the brink of the worst financial crisis since the 1930s. As the year went on, Fed officials shifted their focus away from the risk of inflation as they slowly began to recognize the severity of the crisis.

Yearly pay raises that workers at small businesses used to count on have become a casualty of the weak economy. They are increasingly based on performance - not just an employee's performance, but the entire company's. Raises at many businesses are also smaller than they were before the recession began five years ago. And some employers are using rewards other than annual raises to compensate workers. "The days of the traditional merit increases and cost-of-living increases seem, at least for now, to be behind us," said Carrie Cherveny, vice president of employment practices for AlphaStaff, a Fort Lauderdale-based firm that provides human-resources services such as payroll, benefits administration, and hiring assistance.

THE ACHINGLY SLOW global economic recovery was chosen as the top business story of the year by business editors at the Associated Press : *  1. THE GLOBAL ECONOMY : Worldwide growth was slack again in 2012. The global economy grew just 3.3 percent, down from 3.8 percent in 2011 and 5.1 percent in 2010, the International Monetary Fund estimates. The U.S. economy, the world's largest, failed to gain traction. Five years after a recession seized the economy and more than three years after it ended, growth in the United States was only about 2 percent.