Economy Shows New Signs of Growth, but Jobs Still Lag

JIM LEHRER:

The U.S. economy is growing again for the first time in more than a year. The government reported new numbers today that showed expansion in the third quarter.

That touched off a big rally on Wall Street, with the Dow Jones industrial average gaining 200 points. At the same time, there were continuing questions about the employment picture.

Jeffrey Brown has our lead story report.

JEFFREY BROWN:

The news came a year after the financial meltdown touched off the deepest recession in 70 years. The Commerce Department announced the gross domestic product grew by 3.5 percent from July through September, marking an end to four straight quarters of decline.

But there were caveats: Much of the growth depended on government spending for new cars under cash for clunkers and new homes aided by a temporary tax credit for first-time home buyers.

DAVID WYSS, chief economist, Standard & Poor's: I think the U.S. economy is out of recession. I still want to see some positive employment numbers, though. That's what really counts for people. And, remember, about half the increase in the third quarter just came from cars, from that cash for clunkers program.

JEFFREY BROWN:

In fact, today's news about jobs was mixed. First-time claims for unemployment benefits fell less than expected last week, even as the overall number of people relying on those benefits continued to drop.

For his part, President Obama welcomed word of growth, but said joblessness is still a major obstacle to full recovery.

U.S. PRESIDENT BARACK OBAMA:

We have got a long way to go to fully restore our economy and recover from what's been the longest and deepest downturn since the Great Depression.

And while this report today represents real progress, the benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we're creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well.

JEFFREY BROWN:

As the president spoke, a bill to extend benefits for many of the unemployed was before the Senate. But Majority Leader Harry Reid complained, wrangling over other issues was delaying actions.

SEN. HARRY REID, D-Nev.:

We have got to get the unemployment done. We have a million people that are waiting for that money.

JEFFREY BROWN:

In the meantime, the administration faced questions about just how many jobs its stimulus programs are creating or saving.

The government claimed 30,000 jobs in its initial counting, but the Associated Press reported, a review of contracts shows that number is at least 5,000 too high. The White House said it's correcting early mistakes, but believes the AP account "draws on misleading conclusions from a handful of examples."

But there was no dispute on the floor of the Stock Exchange. The stronger-than-expected report on GDP broke a four-day slide. The Dow Jones industrial average closed at 9962, gaining 2 percent in value for the day. The Nasdaq rose nearly that much, gaining 38 points, to close at 2097.

So, how do these latest economic numbers square with what is happening on Main Street?

We get a snapshot of three regions today from Shirley Leung, business editor or The Boston Globe; Diane Swonk, chief economist at Mesirow Financial, a diversified financial services firm in Chicago, and William Conerly, an economist who runs his own consulting firm in Portland, Oregon.

Diane Swonk, I will start with you.

And let's start with the good news of the GDP growth. What do you see in your region that supports that?