A work in progress

CHICAGO – After a long spell of lackluster business growth, the economy is showing signs of vigor, but more work needs to be done to ensure that the recovery is self-sustaining, Treasury Secretary John Snow said Wednesday.

Consumers are spending, the stock market is up 30 percent since March, industrial activity is on the rise and the economy in September added jobs for the first time in eight months – 57,000 of them, Snow said in a speech to the Commercial Club of Chicago.

“I’m not pointing out these facts to claim any victories,” he said. “To the contrary, too many people are still out of work.”

Snow defended President Bush’s third round of tax cuts against Democratic accusations that the relief has mainly benefited the wealthy and created a record-setting federal deficit, but failed to create a significant number of new jobs.

The secretary contended that without the latest round of tax cuts, “the unemployment rate would have been nearly 1 percent higher” and “as many as 1.5 million fewer Americans would be working.” In September, the nation’s unemployment held steady at 6.1 percent as the economy added jobs.

Snow touted Bush’s recently unveiled six-point plan aimed at strengthening the recovery, which among other things calls on the Republican-controlled Congress to make the tax cuts permanent.

Of the record $374.2 billion federal government budget deficit, Snow said that “as the economy grows, government revenues will increase, which will help keep the deficit under control.”

The economy – as measured by gross domestic product – could clock in at blistering 7 percent growth rate in the July-September quarter, some economists predict. That would be a big improvement over the 3.3 percent pace posted in the second quarter. The government will release the third-quarter GDP estimate Oct. 30.

Before delivering his speech, Snow visited major trading exchanges. At the Chicago Board of Trade, when he walked over to the “30-year pit,” many of the traders started chanting “Thirty! Thirty!” in unison – a reference to the 30-year Treasury bond. The government in 2001 stopped selling new 30-year bonds, but old ones are still traded.