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There are several signs the nation is pulling out of the worst recession since World War II, but the positive news comes at a big cost. Last month alone, the government added more than $180 billion to the deficit, which is predicted to hit nearly $1.3 trillion by the time the 2009 fiscal year ends Sept. 30. That amounts to $17,000 per family of four in the country.
"The rising deficits are testaments so the fact that the government is spending a lot of money trying to fix the economy," said Charles Herman of the ABC News Business Unit, "and all signs appear that the economy is doing better. The worry is, long term, how do we deal with these big deficits?"
But when it comes to the overall economic picture, the Federal Reserve says the downturn has hit bottom. It's highly anticipated report on Wednesday indicated financial markets, consumer spending and corporate inventories are stabilizing.
"Economic recoveries are really not straight lines, and I think the news we got is an indicator that things are little tough out there," Herman said.
Weekly jobless claims came in worse than expected on Thursday, but the total number of people receiving unemployment benefits actually fell by 141,000.
"More people, perhaps, are getting hired and so the number of people needing the unemployment decreased," Herman said, warning there is another, darker, interpretation: "It can also be a sign that the benefits people had are running out."
While there has been good news recently about the housing market, a record number of Americans are still in danger of losing their homes to foreclosure . In July, there were more than 360,000 foreclosure filings, up 7 percent from June, and 32-percent higher than this time last year.
While some are concerned inflation may be around the corner, Fed Chairman Ben Bernanke says the government has an exit strategy when it comes to the trillions of dollars they've pumped into the system so far.
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