Growth signals end to recession, but unemployment may still be on the rise

The Commerce Department reported that the economy’s gross domestic product, a broad gauge of the overall economy, expanded at a 3.5 percent rate in the third quarter. The expansion came with a rebound in personal consumption, federal government spending, exports and private inventory investments.

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The gains were better than the expected 3 percent increase, and brought to an end four straight quarters of economic contraction.

Even so, Democrats and Republicans emphasized that voters will continue to feel the economy worsening, with the unemployment rate, now 9.8 percent, continuing to rise. Private and government estimates expect the unemployment rate to average 10 percent or higher in 2010.

President Barack ObamaBarack Hussein ObamaAfter Dems stood against Pompeo, Senate’s confirmation process needs a revamp ‘Morning Joe’ host: Trump tweeting during Barbara Bush funeral ‘insulting’ to US Trump and Macron: Two loud presidents, in different ways MORE downplayed the good economic news, saying Thursday that the economy has “a long way to go.”

One of his chief economic advisers said a growth rate of between 2 and 3 percent would not necessarily create a strong enough expansion to see widespread decline in the unemployment rate.

“You need to get 4-5 percent GDP growth to get the kind of really radical decline in the unemployment rate that we all want to see,” Christina Romer, chairwoman of the president’s Council of Economic Advisers, said at a panel organized by The Christian Science Monitor.

“There is no champagne in our office until we start adding jobs,” Romer said.

Unemployment rates will play a large role in political campaigns as lawmakers head into the 2010 midterm cycle. Democrats argue that the economy would be far worse without the various stimulative measures in the last year.

The George W. Bush and Obama administrations both backed the $700 billion bailout for the financial sector, while Obama made the $787 billion fiscal stimulus package his top priority upon entering office.

On Friday, the Obama administration will release information about the number of jobs created or saved already by the stimulus package’s spending provisions. Republicans have harshly criticized the stimulus as an expensive distraction. Private and government estimates indicate, though, that it has had a positive impact on 800,000 to 1.5 million jobs.

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Romer said the White House is considering a broad range of additional measures to stimulate the economy and that officials are debating what gets the most “bang for the buck.”

She said the administration supports extended unemployment benefits and an extension of a tax credit to spur home sales. She said additional aid to states is under discussion and that many economists believe it has helped bolster the economy.

“I think a very common answer is you’ve got to help the states. It’s been very helpful so far,” Romer said.