NEW YORK (AP) — The employment outlook isn’t generating nearly as many headlines as the subprime mortgage mess, but maybe it should. That’s because the job market is in pretty good shape, offering support to the economy when other factors are surely weighing on growth.It’s easy to see why the implosion in mortgages to people with weak credit has panicked stock investors. Their biggest fear is that the subprime blowup could hit the broader economy hard, potentially leading to a recession.

The subprime business certainly is in a free fall, with delinquency rates surging to levels not seen in more than three years and foreclosures at record highs. With dozens of lenders closing shop, filing for bankruptcy or being sold, things could grow worse before getting better in this ugly corner of the mortgage market.

Still, while Wall Street is reeling from subprime worries — with the Dow Jones industrial average hitting record highs a month ago to plunging below the psychologically important 12,000 mark in recent days — this big mess shouldn’t really be such a shock.

It was no secret that people with spotty credit histories were increasingly allowed to borrow money to buy homes more costly than their limited income would deem prudent.

The business grew sharply in recent years. About 20 percent of total new mortgage issuance in 2006 was to subprime borrowers, up from five percent a decade ago. That created $600 billion in new obligations last year.

“As the Fed was raising rates over the past three years, mortgage lenders were offering teaser rates to suck more borrowers into the mortgage market,” said economist Ed Yardeni. “If you lend money to someone who doesn’t qualify to borrow money in the first place, why the surprise when they don’t pay?”

For the subprime woes to widen to the overall economy, Americans who don’t have low credit scores will have to start struggling to pay off the money that they also borrowed. A hint of that showed up in a report by the Mortgage Bankers Association this week that said prime fixed-rate mortgage delinquencies rose to 2.27 percent in the fourth quarter from 2.10 percent in the third quarter.

Also worrisome is whether there will be a widespread credit squeeze if all lenders start clamping down on borrowing. That would be especially bad for the already battered housing market, since it would likely mean fewer mortgages issued at a time when there is a growing glut of housing supply available.

What’s missing in this litany of woes is the health of the job market. Put simply, people with jobs are less likely to miss or default on their loans.

“Most borrowers now should be able to make their payments because the job market looks stable,” said Gary Thayer, chief economist at St. Louis-based A.G. Edwards & Sons Inc. “The situation would get worse if the business hiring starts to change.”

The latest employment data available shows the job market is still in good shape and pay cheques growing at a faster pace than inflation.

Outside the job losses seen in housing-related industries, there have been employment gains elsewhere including at health care facilities, financial companies, computer-design firms, bars and restaurants, retailers and the government.

The unemployment rate dipped in February to 4.5 percent, while average hourly earnings jumped to $17.16, representing a 4.1 percent increase over the last 12 months. The Labour Department reported on Thursday that the number of Americans filing claims for unemployment benefits dropped by 12,000 to 318,000 last week, the second consecutive weekly decline.

Higher wages help offset some of the strain on household finances that have come from rising mortgage payments for those borrowers who were loaned money with adjustable rates and now are seeing their interest expenses rise.

A solid employment picture also raises the likelihood that consumer spending will hold up — a key component to keeping the economic engine going.

What Wall Street has to remember is that the Federal Reserve “can come to the rescue if needed,” notes Goldman Sachs economist Andrew Tilton. If consumer spending were to slow sharply alongside a broad tightening of credit, the Fed’s policymakers could start cutting overnight borrowing rates to keep the US economy from stalling.

That’s why investors might want to look beyond the subprime doom. Things might not be as bad they look.