Even though some economists say the report should dispel any lingering doubts that the downturn is over, it may be cold comfort to workers and businesses.

Forecasters say third-quarter growth was likely 3 percent to 3.5 percent at an annual rate, driven largely by the federal stimulus package.

Although solid, that is not the kind of breakthrough turnaround needed to reverse the dramatic decline in gross domestic product last fall and winter. GDP declined at a 5.4 percent rate in the fourth quarter and 6.4 percent in the first quarter, and has fallen for four consecutive quarters.

If the new GDP number falls in the expected growth range, it will not be big enough to spur significant new hiring, experts said. And forecasters generally think the fourth quarter and much of next year will see more anemic growth rates.

Not until the middle of next year, at the earliest, is the economy expected to gather enough momentum to put a meaningful dent in the nation's high unemployment rate.

Adding to the skepticism about what the uptick in growth will mean was Wednesday's report showing new-home sales unexpectedly dropped in September. The report prompted Goldman Sachs to downgrade its expectations for third-quarter GDP growth to 2.7 percent, from 3 percent.

A revival in the depressed home-building industry was seen as positive for the economy in the third quarter.

The housing market has been boosted by the federal government's $8,000 tax credit for first-time home buyers, a program that is set to expire at the end of November.

"The conviction that the recovery is going to be strong enough is just not there," said Ross DeVol, director of regional economics at the Milken Institute think tank.

When the recession first began, he said, businesses made giant cuts from their payrolls, anticipating that the slowdown would mirror the Great Depression. That led productivity _ or output divided by work hours _ to surge 6.4 percent from April through June of this year, the largest gain in almost six years. In past recessions, productivity has tended to fall.

Now, even though employers realize that the economy is not quite as bad as they had anticipated, he said, they aren't ready to believe that a recovery has begun.

Jim Shanman is a case in point. His graphic design and marketing studio, Asylum, is experiencing the biggest slump he's seen in 24 years, and he laid off two employees since business slowed late last year.

Now, Shanman says, he "is wearing 17 hats instead of the usual 10, but you have to do what you have to do in tough times," he said. He has no full-time employees, and depends on freelancers to do any extra work he can't complete himself.

He's starting to see some positive signs of recovery _ a bank client agreed to go forward on a project it wouldn't have considered six months ago, and new clients seem more eager to commit to contracts. But he has no plans to hire new employees until mid-2010 at the earliest.

"We need to get back to where we're profitable, and we know that we can maintain it over a certain period of time," he said.

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(c) 2009, Tribune Co.

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