Transcripts

The Economy Shows Growth

SUSIE GHARIB: a home run for investors today on signs that the recession is over. The Dow surged almost 200 points and the other major stock indexes also rallied. The trigger: a government report showing the economy grew for the first time in over a year, up 3.5 percent in the third quarter. It was also the fastest growth rate in two years. But as Suzanne Pratt reports, it's unclear whether the healthier growth will last.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's easy to get jazzed about the strength of the U.S. economy in the third quarter. After all, America was firing on many cylinders in the June through September stretch with solid gains in consumer spending, exports and home construction. President Obama cautiously welcomed the newest economic snapshot, saying it's a sign the recession is abating.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: But I also know that we've got a long way to go to fully restore our economy and recover from what has been the longest and deepest downturn since the great depression.

PRATT: Much of the third quarter growth came from government stimulus measures like tax credits for first-time home buyers and the popular cash for clunkers program. As a result, some experts question whether the private sector alone will be able to keep the economy going in the fourth quarter. Citi economist Steven Wieting predicts GDP will downshift to about 2 percent then, partly because of rising energy costs.

STEVEN WIETING, SR. ECONOMIST, CITI GLOBAL MARKETS: That is weighing on what I think would be an otherwise an improving holiday sales picture. The positives though is that we have seen probably some more strength in sales away from autos. We've seen stronger industrial production and continued, continued large declines in inventories.

PRATT: There are still some economists who worry about a double dip recession. But most believe the U.S. has turned the corner. Goldman Sachs' Jan Hatzius says despite the brisk growth, the economy is not yet able to produce many jobs.

JAN HATZIUS, CHIEF U.S. ECONOMIST, GOLDMAN SACHS: I do expect job creation to begin gradually in the first half of 2010. Though I don't think it's going to be strong enough to produce a drop in the unemployment rate in 2010.

PRATT: Even with the GDP data, most Americans probably don't believe the recession is over and for good reason. The nation's unemployment rate is close to 10 percent and likely to climb higher still. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.