WASHINGTON — Evidence is piling up that the worst part of the recession has ended. But that doesn’t mean the pain is over.
A better-than-expected unemployment report Friday — job losses declined to the lowest level in six months — capped a week of encouraging news, including firmer home sales, a revival in consumer spending and fresh optimism about the biggest U.S. banks.
The economy remains vulnerable to further shocks, and 13.7 million people are unemployed. The jobless rate rose to 8.9 percent in the new report and still seems headed for a stinging 10 percent.
Colorado’s unemployment rate in March was 8.2 percent, up from 7.9 percent in February and 4.8 percent a year earlier, according to the U.S. Bureau of Labor Statistics. Colorado economists expect the rate to stay high for the rest of the year.
Yet confidence is building that the recession, the longest since the Great Depression, will end this summer or fall, setting the stage for a slow recovery.
President Barack Obama said Friday “the gears of our economic engine do seem to be slowly turning once again.” By some measures, the darkest months have passed. The plunges in economic activity and rising waves of layoffs seem to have subsided.
“The winds are still howling, but I think we can see the sunlight on the distant horizon,” said Mark Zandi, chief economist at Moody’s . “Clearly, the job losses are moderating.”
Wall Street investors could see the sunlight too. The Dow Jones industrials gained nearly 165 points and finished 4.4 percent higher for the week. It was the eighth gain for the index in nine weeks.
The economy probably is still shrinking but only at about half the pace — around 3 percent — it had in the prior six months, the worst in 50 years.
Job losses are expected to continue through the rest of the year, but are likely to be smaller in number.
Losses averaged 700,000 a month in the first quarter but dropped to 539,000 in April, according to Friday’s Labor Department report.
They should average around 500,000 in the current quarter and taper off to 250,000 a month in the final quarter of the year, according to some projections.
That’s probably cold comfort to Tara Barrone, 28, of McLean, Va., who was checking out job prospects at the Secret Service at a career fair Friday.
“Government jobs are popular because of the sense of stability,” she said. The lines at the Secret Service booth were much longer than at other recruiters.
Federal Reserve Chairman Ben Bernanke earlier this week gave his most optimistic prediction yet about the end of the recession.
He said he expects the economy to start growing again this year, though the comeback could be weak and more jobs will disappear even after recovery starts.
The Fed says unemployment will remain elevated into 2011.
Economists say the job market may not get back to normal until 2013.
If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate in April would have been 15.8 percent.
