By Joel L. Naroff

It’s a new year and it seems that almost everyone is glad to forget 2009. Yet we have come an incredibly long way in just one year. Twelve months ago a worldwide financial meltdown and a multi-year recession looked inevitable. Today, we are asking why growth isn’t stronger and jobs aren’t plentiful.

Looking back on it 2009 was an amazing year. After the bankruptcies came job losses that were breathtaking. Corporate strategy was simple: Survive. That meant slashing costs and hunkering down. In just six months, companies reduced their payrolls by nearly 3.4 million workers. The unemployment rate rose from under 8% to over 10%.

Consumers, surveying the economic catastrophe, ducked and covered as confidence collapsed. People considered their prospects and decided shopping was a luxury they could do without. Spending slowed and the economy receded at the fastest pace in nearly twenty years. By March, the stock markets had cratered and all hope seemed to have faded.

Fast forward six months and we start 2010 with a totally different mindset. The Great Recession has ended as the economy has expanded now for two consecutive quarters. Consumers are spending a little more and have started visiting motor vehicle showrooms again. The housing market has stabilized with home sales improving and prices firming. Manufacturing output is on the rise and consumer and business confidence is getting better. Even the equity markets have rallied dramatically from their lows.

Still, it’s hard to convince a lot of people, especially those looking for work, that the economy is in good shape. Critically, the job market remains in disarray. Yet even here the news is getting better. There was actually some modest job growth in November, the first rise in two years. True, the gain was not backed up by another increase in December but I wouldn’t be surprised if that decline turns out to be just a bump in the road.

More consistent payroll gains are near but it is not likely that jobs will become plentiful. Since the labor market always lags the turn in the economy, it may be many months before we see decent job growth. We may not see a return to full employment for several years.

Finally, there is the outlook for interest rates. The Fed looks to be on hold for an extended period though I believe some rate hikes will occur this year. At the same time, longer-term rates could react sharply to an improving economy and rise even before the Fed starts acting.

We have survived the Great Recession and the outlook for 2010 is positive. But right now there are no engines of growth that seem to be revving up. Since jobs, confidence and consumer spending tend to move together, households are not likely to change their careful spending ways significantly. That level of demand may not be enough for businesses to speed up hiring and spend heavily on machinery, equipment or other capital goods. And even the stimulus funds will run out this year. The expansion will continue but growth this year could turn out to be less than we all are hoping for.