bjbjLULU JUDY WOODRUFF: So what do these developments say about the health of the U.S. economic
recovery?
For that, we turn to Neil Irwin, who covers business and economics for The Washington
Post.
Neil, it's good to have you back with us.
NEIL IRWIN, The Washington Post: Thank you.
JUDY WOODRUFF: So, what -- looking at all these numbers and all these indicators, what
do you pay the most attention to this week?
NEIL IRWIN: Well, what we saw is a third-quarter growth number.
The U.S. economy is not falling off a cliff.
The U.S. economy is plugging along.
We grew at a 2.5 percent rate in the July-through-September quarter.
That's not great, but it is enough to mean that we're not contracting.
We're not falling back into the abyss and back into a new recession.
JUDY WOODRUFF: So does that mean there will not be a double dip?
NEIL IRWIN: It could always happen, but if it did happen it didn't start in the third
quarter, it would appear.
What we're seeing is that even as the job market is very rough, we're not seeing robust
growth by any measure, but what we are seeing is a certain resilience in the U.S. economy,
in the sense that businesses keep investing, consumers keep spending money.
They're paying down debts.
So it's very slow, it's very painful, it's very sluggish, but it is growth, and that's
something.
JUDY WOODRUFF: What are businesses investing in?
Do we know?
NEIL IRWIN: Equipment and software spending has been rising a lot for two years running.
It rose at a 17 percent annual rate in the third quarter.
Businesses, back in '09, they weren't buying new equipment.
They were not investing in new factories.
There is a catchup effect going on, where they're saying, you know what, we need to
buy some new equipment just to make up for what is worn out.
And so that's creating a real driver for the economy.
That's been one of the sources of strength in this recovery.
JUDY WOODRUFF: But one keeps hearing that businesses are still -- there is still this
air of uncertainty hanging over everything, and that businesses are holding back.
So how do you square that with what some of these numbers show?
NEIL IRWIN: Yes, what's happening is, businesses, they're buying enough equipment and they're
hiring enough employees to keep up with demand they already see.
What they're not doing is investing in the future.
They're not expanding their capacity.
They're not building a new factory and hiring 1,000 new workers to staff it.
Instead, they're only doing what they absolutely have to, to fulfill the demand they're seeing
from their consumers.
So, as long as that's the case, we won't see rapid growth.
We will see this kind of 2 percent to 3 percent growth that is really treading water, rather
than growing rapidly.
JUDY WOODRUFF: And what about consumers?
What are they buying?
NEIL IRWIN: What they are not buying is a lot of big-ticket items.
So, auto sales, we saw with Whirlpool, appliance sales, these big-ticket durable goods have
not really risen the way you would have hoped them to.
That said, people have cut back so much that there is not the room to cut that you might
expect.
JUDY WOODRUFF: And is it possible to say which one of these, or is it both, that is the main
driver for growth?
Is it mostly the investment?
Is it the consumers or what?
NEIL IRWIN: Look, consumers are weighed down by a lot of things.
They have huge household debts, mortgages they're paying off.
People are underwater on their mortgages.
And that's what is holding back consumers.
Consumer spending is rising fairly slowly.
The corporate sector is actually in good financial shape.
They have lots of money on their balance sheets.
They have access to the debt markets.
They can borrow money when they need to.
Debt levels are fairly modest.
So this growth out of the corporate sector, that's one of our best hopes going forward
for this expansion to continue.
JUDY WOODRUFF: But how healthy, Neil Irwin, can this recovery be if companies, if businesses
are still not hiring people in a big way?
NEIL IRWIN: Well, ultimately, it will never feel like a recovery until that changes.
And what we saw this week is companies are expanding, but only as much as they absolutely
have to.
They're still reluctant to bring on employees.
We saw very weak job growth the last few months.
Unless that changes, this will not feel like a recovery to a lot of Americans.
This will not feel like a place where we have a low unemployment rate and the conditions
we all want to see.
JUDY WOODRUFF: And what about the role of Europe in all this?
They did come up with a deal, although there have been deals before that seemed to fall
apart or at least not be as significant as they looked initially.
What role is that playing in this?
NEIL IRWIN: You know, it's amazing the linkages we have seen between the U.S. economy and
Europe over the last couple of years.
It seems like every time things flare up over there and there's another wave of crisis and
panic, the next couple of months, you see weaker job growth here and you see growth
slow down over here.
Businesses are connected to it.
It affects the stock market.
It has a lot of linkages that are greater than you might expect.
And so finding a long-term solution for Europe's problems is really important for the U.S.
economy.
What we saw this week was progress, but not an absolute solution.
What we see -- there's a lot that has to be fixed there still.
JUDY WOODRUFF: So, as you look ahead, what are the most important things you're paying
attention to?
NEIL IRWIN: It s -- one big thing is whether the Europeans can take this framework for
an agreement and a deal and turn it into actually something that is executed, that really does
stand as a big fund that is kind of a wall of money preventing a debt crisis from causing
a collapse in European nations.
That's the key.
JUDY WOODRUFF: And the Federal Reserve here, to what extent is that a factor in all this?
NEIL IRWIN: Well, they're meeting next week and going to decide what to do next.
They have done a lot.
They have had interest rates near zero for almost three years now.
They announced a couple of things at their last two meetings to try and push longer-term
interest rates down lower.
They will talk about more things in that vein this week -- probably won't do it next week,
rather.
Probably won't pull the trigger, but they're certainly looking for more ways that they
can try and push money into the economy and get growth a little faster.
JUDY WOODRUFF: Well, there's a lot to chew on, and there will be even more in the days
to come.
Neil Irwin of The Washington Post, thank you.
NEIL IRWIN: Thanks, Judy.
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