New Data Show Economy Growing Again
ROBERT SIEGEL, host:
The economy is growing again. The gross domestic product expanded at an annual rate of 3.5 percent in the third quarter. Today, President Obama said he is gratified by the latest numbers.
President BARACK OBAMA: This is obviously welcome news, and affirmation that this recession is abating and the steps we've taken have made a difference. But I also know that we've got a long way to go.
SIEGEL: NPR's Tamara Keith tells us why the path ahead is still such a long one.
TAMARA KEITH: By the numbers, the recovery is pretty remarkable. At the beginning of this year, GDP was down more than 6 percent. Now, it's up more than 3; it's a nearly 10-point swing. But we have to remember, the economy is getting a lot of help from the government: Cash for Clunkers, the first-time homebuyer tax credit, stimulus projects, a fed fund's rate at near 0 percent, and artificially low mortgage rates.
Ms. CHRISTINA ROMER (Chairperson, Council of Economic Advisors): Absolutely, it's a big part of the turnaround that we've seen.
KEITH: Christina Romer is chair of the president's Council of Economic Advisors.
MS. ROMER: The way this is supposed to work, is the government fills the gap until the private sector comes back. And I think we are starting to see some good signs.
KEITH: But if you take out Cash for Clunkers and the homebuyer tax credit, that GDP number starts to look less impressive. John Silvia, chief economist at Wells Fargo, says the big question is whether this recovery will be sustainable once the government starts to pull out.
Mr. JOHN SILVIA (Chief Economist, Wells Fargo Securities): The patient, at some point in time, has to get up out of bed and stand on their own two feet. Now, they may be little wobbly, but to continue to supply support to the marketplace is probably going to create a false sense.
KEITH: So, going forward, Silvia and other economists expect economic growth will be more tame. And there's another issue: unemployment. A report out this morning showed 530,000 people applied for unemployment benefits last week. It was a slight improvement from the week before. But less bad isn't actually that good. Just ask Frank Zeleny(ph).
Mr. FRANK ZELENY: My accounting?
(Soundbite of laughter)
Mr. ZELENY: Recession over? No, not anytime in the near future.
KEITH: Eighteen months ago, Zeleny was laid off from his job on Wall Street. He's been trying to find a job ever since, and works a couple days a week as a substitute teacher to get a little income.
Mr. ZELENY: It's catch as catch can. Every morning at 6:30, I wait to see if the phone is going to ring. If it does, it's a good day. If it doesn't, oh well, go out and rake the yard.
Mr. NARIMAN BEHRAVESH (Economist, IHS Global Insight): The reality is that the jobs recession hasn't ended, even though the GDP recession, the economic recession has ended.
KEITH: Nariman Behravesh is an economist at IHS Global Insight.
Mr. BEHRAVESH: And unfortunately, the employment picture always lags the recovery by three to six months. So it will take a little bit longer before both households and businesses feel comfortable and confident that the recovery has legs, so to speak.
KEITH: That's been the pattern in the last several recessions. John Silvia, at Wells Fargo, says we need to keep these mixed economic signals in perspective.
Mr. SILVIA: You need to congratulate yourself because you just made it through probably the toughest recession since World War II. So going forward, OK, we may not have boom times right away, but we still have economic growth. That'll lead the job growth, and things are getting better.
KEITH: Too soon, he says, for champagne. But you might want to have some on hand for that day when it's clear the job market is back.
Tamara Keith, NPR News, Washington. Transcript provided by NPR, Copyright NPR.