Economic Growth Expected, but Can It Be Sustained?

The Great Recession may be over, but the recovery is just beginning — and it doesn't promise to be much easier.

In this photo made Oct. 14, 2009, a General Electric (GE) refrigerator is shown at Best Buy in...

In this photo made Oct. 14, 2009, a General Electric (GE) refrigerator is shown at Best Buy in Mountain View, Calif. Orders to U.S. factories for big-ticket manufactured goods rose in September as the biggest jump in demand for machinery in 18 months offset weakness in commercial aircraft and autos.(AP Photo/Paul Sakuma)

(AP)

Economists forecast the nation's total output grew at an annual rate of 3.3 percent between July and September, after contracting for a record four straight quarters. That growth has been fueled by a huge influx of government cash, including a temporary tax credit for first-time homeowners and a $1.25 trillion Federal Reserve program to keep mortgage rates low.

Both efforts are likely to end by next summer, and the housing industry is already feeling it. New home sales in September unexpectedly fell 3.6 percent, the first decline since March and a distinct sign of weakness in a market that had rebounded strongly over the summer.

Homebuilders are traditionally big employers, but the industry isn't hiring yet because sales are still sluggish.

While the unemployment rate fell slightly in most metro areas in September, the trend was fueled by discouraged job seekers leaving the work force, according to government data released Wednesday. The rate fell in 223 of 380 metros, or almost 60 percent. The jobless rate rose in 123 areas, and was unchanged in 34.

"The job market is not recovering at all yet," said Jim Diffley, regional economist for IHS Global Insight. "We're looking at another jobless recovery."

That may be happening in the manufacturing sector, which has also been pumped up by government building projects. September orders to factories for big-ticket manufactured goods rose 1 percent last month — not a huge increase but an improvement from a 2.6 percent drop in August, the government reported Wednesday. Demand for machinery offset weakness in commercial aircraft and autos.

That report, however, was not enough to distract investors from the disappointing unemployment and housing reports. Stocks fell Wednesday with the Dow Jones industrial average down 119 points, or 1.2 percent, to 9,805.01.