Economic recovery will be tough, too

WASHINGTON -- The recession may be over, but the recovery is just beginning -- and it's doesn't promise to be much easier.

While the Commerce Department won't its release gross domestic product data until this morning, economists forecast that 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.

But that growth has been fueled by a huge influx of government cash, including a temporary tax credit for first-time homebuyers 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. The Commerce Department reported yesterday that 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.

Home builders are traditionally big employers, but the industry isn't hiring yet because there's a glut of homes on the market. There were 251,000 new homes for sale at the end of September, or about 7.5 months' supply at the current sales pace. That's about two months too much.

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 yesterday.

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 also has 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 yesterday. Demand for machinery offset weakness in commercial aircraft and autos.