Even though the recession officially ended in June 2009, many Americans have remained discouraged about their job prospects and have given up looking. Others have returned to, or stayed in, school. And the vast generation of baby boomers has begun to retire; the oldest are now 67. Their exodus reduces the percentage of adults working or looking for work.
The pickup in hiring hasn't yet benefited the long-term unemployed. Nearly 4.8 million Americans have been out of work for six months or longer, nearly 100,000 more than in January.
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. But if the economy can continue to add 200,000 or more jobs a month, it means that many more people will have disposable income to spend.
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.
The year-over-year increase in home prices in January was the biggest in six years. 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.