WASHINGTON – Bullish yet wary, President Barack Obama is highlighting recent economic bright spots while taking care not to overstate a recovery that still has not put millions back to work.

His Republican rivals, in the face of late-arriving economic good news, are making slight adjustments themselves, arguing that Obama’s policies have been a drag on a recovery that could have taken hold sooner.

The competing rhetoric reflects the positive indicators in areas ranging from retail sales and housing to unemployment and falling gas prices. All this has pushed up consumer confidence, a potential barometer of political attitudes. Even Congress and Obama managed to agree on a two-month payroll tax cut extension before leaving Washington for the holidays.

But the economic signs could prove fleeting, as they were in the early spring when economist also detected upticks in activity only to watch them tumble. These new indicators may hold more promise. But a looming European debt crisis is casting a pall.

No one is more aware of that risk than Obama.

“We’ve got an economy that is showing some positive signs; we’ve seen many consecutive months of private sector job growth,” Obama said last week before departing for Christmas in Hawaii. “But it’s not happening as fast as it needs to.”

For Obama, the danger is in promoting an economy that while, slowly recovering, has yet to reflect reality for millions of Americans, or in highlighting positive signs only to see them falter in 2012.

For David Axelrod, the Obama campaign’s top political adviser, visions of a European financial meltdown are what keep him awake at night.

“I think the American economy is gaining strength, I don’t think many would argue that point,” he said. “The imponderable is not about that, it’s really about these externalities and particularly Europe. Especially now that we’ve passed this threshold on the payroll tax cut and assuming that the Republicans in Congress don’t want to rerun that battle, the one big thing on the horizon is Europe.”

Indeed, as the year ends on an up note, leading economists surveyed by The Associated Press expect the economy will grow slightly faster in 2012 — about 2.4 percent compared with the less than 2 percent annual growth that the economy is expected to register by the end of this year.

But underscoring the political challenges facing Obama, these same economists don’t expect unemployment to drop much in a year from November’s 8.6 percent rate.

The public’s economic outlook is improving. An Associated Press-GfK poll in December found that 37 percent of those questioned expect improvement in the economy in the coming year. It was the first time since May that the sentiment significantly outweighed the share saying the economy would get worse in the next year.

This modestly rosy scenario is contingent on keeping any financial disruptions in Europe contained to the other side of the Atlantic. Obama has pressing European leaders, particularly German Chancellor Angela Merkel and French President Nicolas Sarkozy, to act swiftly to avoid a wholesale debt crisis from taking hold. But Obama has few tools other than persuasion with which to influence an outcome.

In a trend the Obama camp is sure to watch, the public is holding Obama more accountable for the economy. The AP-GfK poll found that the percentage who says Obama deserves little or no blame for the economy’s sluggishness has declined from 43 percent in October to 36 percent now.

Republicans are watching, too.

After months of asserting that conditions under Obama have worsened, Republican presidential candidate Mitt Romney this past acknowledged signs of improvement, but gave Obama no credit.

“I think the economy’s getting better. I sure hope so,” Romney told CNN on Wednesday. “There’s never been a time when our economy has not recovered from recession. We will recover, but it will not be thanks to the president’s policies. It will be in spite of the president’s policies.”

Republican pollster Wes Anderson, a veteran of congressional and presidential contests, says the first quarter of 2012 could lay down crucial markers that could affect the election results.

“If the uptick in economic indicators that we’ve seen here this month continues into the next month at the same general pace, it will be an interesting race and it will be very close, and there will be an opportunity for Obama to win,” he said. “If economic conditions deteriorate at all, I think he’s done.

“If they pick up significantly in the first quarter — I don’t know what that is, but something that is tangible for middle-class America — he probably gets re-elected,” Anderson said.

The White House is ready to have the president maintain a high economic profile, showcasing his bailout of the auto industry as a concrete example of an administration policy that saved job. Beyond that, Obama’s team wants to portray the president as a champion of the middle class.

“The battle is really over the long term because the Republicans have a fundamental theory that we can cut our way to prosperity — cut taxes for the wealthy, cut regulations, especially for Wall Street, and the economy will flourish,” Axelrod said. “We’ve tested that theory and it failed. Badly.”

“This notion that he’s been there, we should fire him and we should go back to what we were doing before the crisis is not a very strong argument,” Axelrod said. “And obviously to the degree that the economy improves it becomes less of an argument.”

Still, even economists friendly to the administration see contradictory signals in the end-of-year upswing.

On the positive side, the number of people applying for unemployment benefits has dropped to the lowest level since April 2008. At the same time, November’s dip in unemployment from 9 percent to 8.6 percent was partly the result of frustrated workers leaving the labor force and no longer looking to be hired. The private sector is hiring, but states, school districts and local municipalities are shedding jobs. Also, despite an increase in consumer spending, Americans are not seeing real income growth.

“For every positive indicator, there is an indicator on the other side that’s worrisome,” said Jared Bernstein, former chief economist to Vice President Joe Biden who’s now with the Center on Budget and Policy Priorities.

Mark Zandi, chief economist at Moody’s Analytics whose data is often cited by Democrats and Republicans, said that for all the encouraging signs, the economy still faces drags. That includes deficit reduction measures that helped reduce the debt in the long term but could cost the economy 1 percentage point in growth next year.

Washington politics poses its own challenges.

“I don’t think 2012 is going to be a break out year for the economy,” he said. “It is an election year and there is going to be a fair amount of political acrimony back and forth. People in business are already on edge. It doesn’t take a lot for them to remain anxious and nervous.”

1 January 2012
Last updated at 06:48 ET

A former member of Japan’s Aum Shinrikyo cult has turned himself in to police after nearly 17 years on the run, one of three remaining fugitives.

Japanese police said Makoto Hirata gave himself up at a police station in Tokyo just before midnight on New Year’s Eve.

He had been in hiding since the cult’s sarin gas attack on the Tokyo subway in 1995, which killed 13 people.

He was immediately arrested on suspicion of conspiring to kidnap the brother of a follower of the cult.

The man he is accused of abducting died after being given an injection at Aum’s main commune at the foot of Mount Fuji, officials said.

Only two other members of the cult are still being sought by police. They went on the run after the gas attack in Tokyo, which injured 6,000 people.

Nearly 200 Aum Shinrikyo members have been convicted of that attack and other crimes.

Thirteen are awaiting execution, after judges in November upheld the death sentence against the final member of the cult to be charged over the 1995 attack.

Reinvented

Aum Shinrikyo began as a spiritual group mixing Hindu and Buddhist beliefs, but developed into a paranoid doomsday cult obsessed with Armageddon.

Former yoga teacher Shoko Asahara started the group in the mid-1980s, and later claimed to have reached enlightenment after a trip to India.

By the time of the Tokyo attack, the group was reputed to have thousands of members, including rich and powerful members of Japanese society.

But Asahara became obsessed with the idea that World War III was about to break out, and began ordering attacks on people he regarded as enemies.

Some 189 Aum cultists have been put on trial over the various attacks carried out by the cult, and 13 sentenced to death, including Asahara. None of the sentences has been carried out.

Aum Shinrikyo reinvented itself as the Aleph group, which continues to operate as a spiritual group.

1 January 2012
Last updated at 06:48 ET

A former member of Japan’s Aum Shinrikyo cult has turned himself in to police after nearly 17 years on the run, one of three remaining fugitives.

Japanese police said Makoto Hirata gave himself up at a police station in Tokyo just before midnight on New Year’s Eve.

He had been in hiding since the cult’s sarin gas attack on the Tokyo subway in 1995, which killed 13 people.

He was immediately arrested on suspicion of conspiring to kidnap the brother of a follower of the cult.

The man he is accused of abducting died after being given an injection at Aum’s main commune at the foot of Mount Fuji, officials said.

Only two other members of the cult are still being sought by police. They went on the run after the gas attack in Tokyo, which injured 6,000 people.

Nearly 200 Aum Shinrikyo members have been convicted of that attack and other crimes.

Thirteen are awaiting execution, after judges in November upheld the death sentence against the final member of the cult to be charged over the 1995 attack.

Reinvented

Aum Shinrikyo began as a spiritual group mixing Hindu and Buddhist beliefs, but developed into a paranoid doomsday cult obsessed with Armageddon.

Former yoga teacher Shoko Asahara started the group in the mid-1980s, and later claimed to have reached enlightenment after a trip to India.

By the time of the Tokyo attack, the group was reputed to have thousands of members, including rich and powerful members of Japanese society.

But Asahara became obsessed with the idea that World War III was about to break out, and began ordering attacks on people he regarded as enemies.

Some 189 Aum cultists have been put on trial over the various attacks carried out by the cult, and 13 sentenced to death, including Asahara. None of the sentences has been carried out.

Aum Shinrikyo reinvented itself as the Aleph group, which continues to operate as a spiritual group.

1 January 2012
Last updated at 06:48 ET

A former member of Japan’s Aum Shinrikyo cult has turned himself in to police after nearly 17 years on the run, one of three remaining fugitives.

Japanese police said Makoto Hirata gave himself up at a police station in Tokyo just before midnight on New Year’s Eve.

He had been in hiding since the cult’s sarin gas attack on the Tokyo subway in 1995, which killed 13 people.

He was immediately arrested on suspicion of conspiring to kidnap the brother of a follower of the cult.

The man he is accused of abducting died after being given an injection at Aum’s main commune at the foot of Mount Fuji, officials said.

Only two other members of the cult are still being sought by police. They went on the run after the gas attack in Tokyo, which injured 6,000 people.

Nearly 200 Aum Shinrikyo members have been convicted of that attack and other crimes.

Thirteen are awaiting execution, after judges in November upheld the death sentence against the final member of the cult to be charged over the 1995 attack.

Reinvented

Aum Shinrikyo began as a spiritual group mixing Hindu and Buddhist beliefs, but developed into a paranoid doomsday cult obsessed with Armageddon.

Former yoga teacher Shoko Asahara started the group in the mid-1980s, and later claimed to have reached enlightenment after a trip to India.

By the time of the Tokyo attack, the group was reputed to have thousands of members, including rich and powerful members of Japanese society.

But Asahara became obsessed with the idea that World War III was about to break out, and began ordering attacks on people he regarded as enemies.

Some 189 Aum cultists have been put on trial over the various attacks carried out by the cult, and 13 sentenced to death, including Asahara. None of the sentences has been carried out.

Aum Shinrikyo reinvented itself as the Aleph group, which continues to operate as a spiritual group.

NEW YORK – From New Zealand to New York, the world eagerly welcomed a new year Sunday with confetti-filled celebrations, glittering fireworks displays and star-studded festivities.

For one night, at least, revelers gathered and hoped for a better future, saying goodbye to a year of hurricanes, tsunamis and economic turmoil that many would rather forget.

In New York, hundreds of thousands gathered at the crossroads of the world to witness a crystal ball with more than 30,000 lights that descended at midnight. Lady Gaga and Mayor Michael Bloomberg led the crowd in the final-minute countdown of the famed crystal-paneled ball drop.

Matheus Campos, a law student from Brazil, threw both arms in the air as the new year began in Times Square.

“It’s awesome,” he said.

Revelers in Australia, Asia, Europe and the South Pacific island nation of Samoa, which jumped across the international dateline to be first to celebrate, welcomed 2012 with booming pyrotechnic displays. Fireworks soared over Moscow’s Red Square, crowds on Paris’ Champs-Elysees boulevard popped Champagne corks at midnight.

But many approached the new year with more relief than joy, as people battered by weather disasters, joblessness and economic uncertainty hoped the stroke of midnight would change their fortunes.

“It was a pretty tough year, but God was looking after us and I know 2012 has got to be better,” said Kyralee Scott, 16, of Jackson, N.J., whose father spent most of the year out of work.

Some New York revelers, wearing party hats and “2012″ glasses, began camping out Saturday morning, even as workers readied bags stuffed with hundreds of balloons and technicians put colored filters on klieg lights. The crowds cheered as workers lit the crystal-paneled ball that would drop at midnight Saturday and put it through a test run, 400 feet above the street. The sphere, decorated with 3,000 Waterford crystal triangles, has been dropping to mark the new year since 1907, long before television made it a U.S. tradition.

In Times Square, hundreds of thousands people crammed into spectator pens ringed by barricades, enjoying surprisingly warm weather for the Northeast. The National Weather Service said it was about 49 degrees in nearby Central Park — about 10 degrees warmer than the normal high temperature.

As the country prepared for the celebration, glum wasn’t on the agenda for many, even those who had a sour year.

“We’re hoping the next year will be better,” said Becky Martin, a former elementary school teacher who drove from Rockford, Ill., to Times Square after spending a fruitless year trying to find a job. “We’re starting off optimistic and hoping it lasts.”

Many expressed cautious hope that better times were ahead after a year in which Japan was ravaged by an earthquake and tsunami, hurricanes wreaked havoc across the country and a debt crisis devastated Europe’s economy.

“Everybody’s suffering. That’s why it’s so beautiful to be here celebrating something with everybody,” said Lisa Nicol, 47, of Melbourne, Australia.

For all of the holiday’s bittersweet potential, New York City always treats it like a big party — albeit one that now takes place under the watchful eye of a massive security force, including more than 1,500 police officers.

Dick Clark, who suffered a stroke in 2004, put in a few brief appearances mentioning that he has hosted his namesake New Year’s Eve celebration for years, but said “tonight, it’s better than ever.” Clark, looking cheerful but struggling with his speech, introduced a performance by Lady Gaga and also assisted in the countdown. The show, hosted by Ryan Seacrest also featured a performance by Justin Bieber.

Natalie Tolli, a 13-year-old from Yonkers, said “it was the best time I ever had, especially seeing Justin Bieber in his red hat.”

Her father, George Tolli, said he and his wife and three daughters and son waited since 2 p.m. to get their place.

“It was a pleasant surprise, very controlled,” he said. “In my 51 years, I’ve never been here for New Year’s. But I did it for the kids. And it was worth it.”

In Las Vegas, fireworks were launched from eight rooftops at midnight. Police earlier shut down a four-mile section of the Strip to vehicle traffic, letting revelers party in the street. Casino nightclubs touted pricey, exclusive bashes hosted by celebrities including Kim Kardashian, Bruno Mars and Fergie.

Authorities reported only minor hiccups, including an ash tray canister fire on the 15th floor of the Paris Las Vegas hotel casino and an intermittent power outage at Bellagio that led to casino officials closing its buffet.

The Bellagio outage also affected a bank of slot machines and some guest rooms, but the problem was fixed before 8 p.m., allowing all gambling, nightclub parties and shows to go forward.

Thousands of New Year’s celebrants turned out in Salt Lake City for a variety of events organized by the Downtown Alliance, while in Seattle crowds were treated to a fireworks display that included barrages from the top of the city’s iconic Space Needle.

A typically busy New Year’s Eve in Los Angeles became even busier as police and fire crews remained on alert for more arson attacks, after dozens of deliberately set car fires hit the city in the early morning hours of Friday and Saturday. Four suspicious car fires were reported Saturday evening.

Atlanta welcomed thousands to its downtown, where a giant peach dropped at midnight. Fireworks were launched from the top of the Space Needle in Seattle; in Houston, tens of thousands celebrated at a party with country singer Delbert McClinton.

In summer temperatures at Key West, Fla., three separate midnight drops took place. A giant facsimile of a conch shell was lowered at Sloppy Joe’s Bar, Ernest Hemingway’s favorite watering hole when he lived in Key West. At the Schooner Wharf Bar, the bar owner dressed as a pirate wench and dropped down from the mast of a tall sailing ship. And at the Bourbon Street Pub complex, a drag queen named Sushi descended in a glittering 6-foot red women’s high heel.

The town of Eastport, Maine, lowered an 8-foot-long wooden sardine from a downtown building at midnight, in celebration of its sardine canning and fishing history.

In San Francisco, revelers lined the waterfront for the annual fireworks show.

The first worldwide celebrations started in the island nation of Samoa, which hopped across the international date line at midnight on Thursday, skipping Friday and moving instantly to Saturday.

Samoa and neighboring Tokelau lie near the dateline that zigzags vertically through the Pacific Ocean; both sets of islands decided to realign themselves this year from the Americas side of the line to the Asia side to be more in tune with key trading partners.

In Sydney, more than 1.5 million people watched the shimmering pyrotechnic display designed around the theme “Time to Dream.” In London, some 250,000 people gathered to listen to Big Ben chime at the stroke of midnight. Scotland Yard reported they arrested 77 people during London’s New Year’s celebrations.

World leaders evoked 2011′s struggles in their New Year’s messages with some ambivalence.

French President Nicolas Sarkozy warned Europe’s crisis is not finished and “that 2012 will be the year full of risks, but also of possibilities.”

Pope Benedict XVI marked the end of 2011 with prayers of thanks and said humanity awaits the new year with apprehension but also with hope for a better future.

“We prepare to cross the threshold of 2012, remembering that the Lord watches over us and takes care of us,” Benedict said. “In him this evening we want to entrust the entire world. We put into his hands the tragedies of this world of ours, and we also offer him the hopes for a better future.”

In Brazil, heavy rains didn’t halt parties as upward of 2 million people gathered on Copacabana beach in Rio de Janeiro and nearly as many on a main avenue in Sao Paulo, South America’s biggest city. Massive fireworks displays and top music acts graced stages across the nation.

Brazil has seen healthy economic growth in recent years, as the country prepares to host the World Cup in 2014 and the Olympics in 2016. Growth, however, has stalled in recent months, and Brazilian leaders are trying to stimulate the economy in the new year.

“This was a good year for Brazil and I think things are only getting better, it feels like we’re making big advances,” said Fabiana dos Santos Silva, an 18-year-old student who gathered with hundreds of thousands of others on a main avenue in Sao Paulo.

Several people preparing to celebrate the holiday in the U.S. told the AP that they would usher in the New Year hoping the Congress would become a more cooperative place. Some talked about their hopes for the presidential election. Others said they hoped to hold on to their job, or find a new one to replace one they’d lost.

An Associated Press-GfK poll conducted Dec. 8-12 found that 62 percent of Americans are optimistic that the nation’s fortunes will improve in 2012, and 78 percent hopeful that their own family will have a better year. Most wrote off 2011 as a dud.

Debbie Hart, 50, of Perry, Ga., called herself the “perpetual optimist” who believes each year will be better than the one before.

“I married a farmer. `Wait until next year. Next year will be better.’ That’s what I’ve been hearing for 30 years,” said Hart. “I have faith.”

___

Contributing to this report were Associated Press writers Chris Hawley and David B. Caruso in New York, Oskar Garcia in Las Vegas, Bruce Shipkowski in Jackson, N.J., Dorie Turner in Atlanta, Greg Keller in Paris, Harold Heckle in Madrid, Kristen Gelineau in Sydney, Ray Lilley in Wellington, New Zealand, Frances D’Emilio in Vatican City, Meera Selva in London, Bradley Brooks in Sao Paulo, Brazil, Jack Chang in Mexico City and Melissa Eddy in Berlin.