Economy growing but recovery could be at risk

By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer –

WASHINGTON – Fueled by government stimulus, the economy grew last quarter for the first time in more than a year. The question now is, can the recovery last?
Federal support for spending on cars and homes drove the economy up 3.5 percent from July through September. But the government aid — from tax credits for home buyers to rebates for auto purchases — is only temporary. Consumer spending, which normally drives recoveries, is likely to weaken without it.
If shoppers retrench in the face of rising joblessness and tight credit, the fragile recovery could tip back into recession.
For the Obama administration, the positive report on economic growth is a delicate one: It wants to take credit for ending the recession. On the other hand, it needs to acknowledge that rising joblessness continues to cause pain throughout the country.
Millions of Americans have yet to feel a real-world benefit from the recovery in the form of job creation or an easier time getting a loan. Even those with jobs are reluctant to spend. The values of their homes and 401(k)s remain shrunken.

President Barack Obama called the report "welcome news" in remarks prepared for a small-business group but acknowledged that "we have a long way to go to fully restore our economy" and recover from the deepest business slump since the 1930s-era Great Depression.
"The benchmark I use to measure the strength of our economy is not just whether our GDP is growing, but whether we are creating jobs, whether families are having an easier time paying their bills, whether our businesses are hiring and doing well," Obama said.
The rebound reported Thursday by the Commerce Department ended the record streak of four straight quarters of contracting economic activity.
The news lifted stocks on Wall Street. The Dow Jones industrials average gained about 150 points in afternoon trading and broader indices also rose.
But whether the recovery can continue after government supports are gone is unclear. Many economists predict economic activity won't grow as much in the months ahead as the bracing impact of the government's $787 billion package of increased government spending and tax cuts

fades.The National Association for Business Economics thinks growth will slow to a 2.4 percent pace in the current October-December quarter. It expects a 2.5 percent growth rate in the first three months of next year, although other economists believe the pace will be closer to 1 percent.
Christina Romer, Obama's chief economist, has acknowledged that the government's stimulus spending already had its biggest impact and probably won't contribute to significant growth next year.
For the third quarter, government support proved crucial. Armed with cash from government support programs, consumers led the rebound in the third quarter, snapping up cars and homes. A jump in spending on big-ticket manufactured goods largely reflected car purchases spurred by the government's Cash for Clunkers program.
Spending on housing last quarter was positive for the first time since the end of 2005. The government's $8,000 tax credit for first-time home buyers supported the housing rebound. Congress is considering extending the credit, which expires Nov. 30.
Federal government spending rose at a rate of 7.9 percent in the third quarter, on top of a 11.4 percent growth rate in the second quarter. And businesses boosted spending on equipment and software at a 1.1 percent pace, the first increase in nearly two years.
Third-quarter activity also was helped by increased sales of U.S.-made goods to customers overseas, as economies in Asia, Europe and elsewhere improved. The cheaper dollar is aiding U.S. exporters, making their goods less expensive to foreign buyers. Exports of U.S. goods soared at an annualized rate of 21.4 percent in the third quarter, the most since the final quarter of 1996.
Businesses, meanwhile, reduced their stockpiles of goods less in the third quarter, after slashing them at a record pace in the second quarter. With inventories at rock-bottom levels, even the smallest increase in demand probably will prompt factories to boost production. This restocking of depleted inventories is expected to help sustain the recovery in the coming months, economists said.

Still, with unemployment at a 26-year high of 9.8 percent and credit hard to get, the recovery faces obstacles.
"Even if we've turned the corner, we know it's a long way before we're completely recovered," Christina Romer, chair of the White House Council of Economic Advisers, said in an interview with The Associated Press. "You can't have an unemployment rate of 9.8 percent and not be deeply troubled."
Economists say the jobless rate probably nudged up to 9.9 percent in October and will go as high as 10.5 percent around the middle of next year before declining gradually. The government is scheduled to release the October jobless rate report next week.
With joblessness growing and wages dipping slightly in the third quarter, consumers are expected to turn more restrained in the months ahead. That would put a much heavier burden on America's businesses to keep the recovery going.
"We're beginning to crawl out a very deep hole," said economist Ken Mayland, president of ClearView Economics. "It will take time to get back to normal again and there are questions about how consumers will hold up in the months ahead. But I think the recovery will be sustained."
To foster the recovery, the Federal Reserve is expected to keep a key bank lending rate at record low near zero when it meets next week and probably will hold it there into next year. With the economy on the mend, the Fed has slowed some emergency support programs but doesn't want to pull the plug until the recovery is on firm footing.
Even with the economy climbing back into positive territory in the third quarter, it's up to another group to declare the recession over. The National Bureau of Economic Research, a panel of academics, is in charge of dating the beginning and ends of recessions. It usually makes it determinations well after the fact.

Clinton cites Pakistani inaction on al-Qaida haven

BY (AP) –

ISLAMABAD — U.S. Secretary of State Hillary Rodham Clinton said Thursday that Pakistan squandered opportunities over the years to kill or capture leaders of the al-Qaida terrorist network responsible for the Sept. 11 attacks.
While U.S. officials have said they believe Osama bin Laden and senior lieutenants have been hiding in the rugged terrain along the border with Afghanistan, Clinton's unusually blunt comments went further as she suggested that Pakistan's government has done too little to act against al-Qaida's top echelon.
"I find it hard to believe that nobody in your government knows where they are and couldn't get them if they really wanted to," Clinton said in an interview with Pakistani journalists in Lahore. "Maybe that's the case. Maybe they're not gettable. I don't know."
A Pakistani journalist had asked Clinton why the fight against terrorism seemed to put Pakistan at the center and why other countries couldn't do more. Clinton noted that al-Qaida has launched attacks on Indonesia, the Philippines and many other countries over the years.
"So the world has an interest in seeing the capture and killing of the people who are the masterminds of this terrorist syndicate. As far as we know, they are in Pakistan."
With the country reeling from Wednesday's devastating bombing that killed at least 105 people in Peshawar, Clinton also engaged in an intense give-and-take with students at the Government College of Lahore. She insisted that inaction by the government would have ceded ground to terrorists.
"If you want to see your territory shrink, that's your choice," she said, adding that she believed it would be a bad choice.

Richard Holbrooke, the special U.S. representative on Afghanistan and Pakistan, told reporters that Clinton planned to meet late Thursday with the army chief, Gen. Ashfaq Parvez Kayani, to get an update on the offensive that began Oct. 17 against Taliban forces in a portion of the tribal areas near the Afghan border.
"We want to encourage them," Holbrooke said. "She wants to get a firsthand account of the military situation."
On Clinton's flight to Islamabad after the interview with Pakistani journalists, U.S. Ambassador Anne Patterson said Clinton's remarks approximate what the Obama administration has told Pakistani officials in private settings.
"We often say, `Yes, there needs to be more focus on finding these leaders,'" Patterson said. "The other thing is, they lost control of much of this territory in recent years and that's why they're in South Waziristan right now."
In Lahore, Clinton told university students that their government had little choice in taking a tougher approach.
Dozens of students rushed to line up for the microphone when the session began. Their questions were not hostile, but showed a strong sense of doubt that the U.S. can be a reliable and trusted partner for Pakistan.
One woman asked whether the U.S. can be expected to commit long term in Afghanistan after abandoning the country after Russian occupiers retreated in 1989.

"What guarantee," the woman asked, "can Americans give Pakistan that we can now trust you — not you but, like, the Americans this time — of your sincerity and that you guys are not going to betray us like the Americans did in the past when they wanted to destabilize the Russians?"
Clinton responded that the question was a "fair criticism" and that the U.S. did not follow through in the way it should have. "It's difficult to go forward if we're always looking in the rearview mirror," said Clinton, on the second of a three-day visit, her first to Pakistan as secretary of state.
The Peshawar bombing in a market crowded with women and children appeared timed to overshadow her arrival. It was the deadliest attack in Pakistan since 2007.
She likened Pakistan's situation — with Taliban forces taking over substantial swaths of land in the Swat valley and in areas along the Afghan border — to a theoretical advance of terrorists into the United States from across the Canadian border.
It would be unthinkable, she said, for the U.S. government to decide, "Let them have Washington (state)" first, then Montana, then the sparsely populated Dakotas, because those states are far from the major centers of population and power on the East Coast.
Clinton was responding to a student who suggested that Washington was forcing Pakistan to use military force on its own territory.
During her hourlong appearance at the college, Clinton stressed that a key purpose of her trip was to reach out to ordinary Pakistanis and urge a better effort to bridge differences and improve mutual understanding.

We are now at a point where we can chart a different course," she said, referring to past differences over an absence of democracy in Pakistan and Pakistani association with the Taliban in Afghanistan.
But her tough comments about Pakistan's will to take on al-Qaida leaders might not sit well among Pakistanis who long have complained about American demands on their country.
Clinton has ruffled feathers before with blunt comments on her trips. On her first visit to Asia in February, she discussed the possibility of a succession crisis in North Korea and suggested the U.S. would not press China that hard on human rights.
On a later trip, she drew criticism from Israeli leaders for talking about a "defense umbrella" for Arab Gulf states to protect them from a potential nuclear threat from Iran.
Despite her comments during the town hall event in Lahore, Clinton declined to touch on the sensitive issue of missile attacks from U.S. drones against on militants inside Pakistan.
The subject has stirred some of the strongest feelings of anti-Americanism in the country, but the U.S. routinely refuses to acknowledge publicly that the attacks are taking place.
"There is a war going on," Clinton said, saying only that the U.S. wants to help Pakistan be successful.

The United States has provided Pakistani commanders with video images and target information from its military drones as the army pushes its ground offensive in Waziristan, U.S. officials said this week.
The U.S. in recent months has rushed helicopters and other military equipment to the country as Islamabad began offensives in Swat Valley and South Waziristan.
"We've put military assistance to Pakistan on a wartime footing," Lt. Col. Mark Wright, a Pentagon spokesman, said Thursday.
Associated Press writers Tim Sullivan, and Pauline Jelinek and Matthew Lee in Washington contributed to this report.
Copyright © 2009 The Associated Press. All rights reserved.

Next NFC Award will be announced shortly: Tarin

Federal Minister for Finance Shaukat Tarin briefs the media on the NFC Award at Governor House. -APP Photo

Thursday, 29 Oct, 2009

PESHAWAR: The National Finance Commission that met here with Federal Finance Minister Shaukat Tarin in the chair Thursday while concluding discussion on the vertical and horizontal distribution of the national resources, agreed on multiple criteria regarding resources’ distribution among the Federation and Federating Units leaving aside the sole criteria of population.

Briefing newsmen after the marathon NFC meeting, the Finance Minister said, the provinces agreed to the distribution of resources on multiple criterions like population, poverty, revenue generation,area, backwardness etc.
'Every province has its own criteria, but we will develop consensual criteria about the distribution of the resources,' he explained.
Currently the provinces get 49 per cent of the divisible pool while the federation is getting 51 per cent, he added. He admitted that the NWFP Government aggressively pleaded its case in the meeting.
The Punjab has shown flexibility over multi-factors criteria, he added.
'We have completed our job now the technical committees of the NFC would further thrash the fiscal matters to reach at a logical end', he remarked.
He declared in clear terms that the next NFC award would be evolved shortly as he does not see problem in evolving a consensus award.
'The next meetings of the NFC will be held in Karachi on November 18 and 19, 2009,' Tarin announced.

To a question about payment of net hydel profit to the NWFP, the Finance Minister said, the Prime Minister would give good news to this effect when he will visit the provincial capital on Oct.30 (Friday).
The meeting also agreed to take into consideration the war damages while distributing the resources and referred to the case of the frontier province which massively hit by the terror war.
The Federal Government, he said with an open heart reduced its distribution proposals from six to three in order to accommodate the provinces’ view point.
Shaukat Tarin said the meeting thoroughly debated the vertical and horizontal aspects of the federal divisible pool and ended up the two-day discussion in one day due to accommodative atmosphere in the meeting.
The meeting observed that the federation and provinces would have to gear up its resources to meet their growing fiscal needs and
added that the meeting decided to hand over the collection of the Capital Value Tax to the provinces in the next award so that their revenue sources could be enhanced.
He maintained that the federation believed the country could not prosper sans strong provinces and in this spirit we are trying to accommodate all the genuine demands of the provinces. He assured that the provinces would get their rights as enshrined in the constitution.

The NFC meeting also strongly condemned the city blast and held it an act of cowardice. Despite the unrest in NWFP, we did not postpone the meeting in order to pass on message to the militants that such barbaric incidents could not deter the government’s resolve of peace and tranquility.
'We equally share in our grief and sorrow with the people of Peshawar and we are standing behind them in this hour of tragedy', he added.
The Finance Minister held out categorical assurance that the Federal Government would fully support the CRBC project when it would be floated in the ECNEC meeting.
In response to a question, he said the NWFP Government would receive its share of aid in the wake of Kerry-Lugar bill. -APP

Security forces secured Sherongai

Updated at: 1448 PST, Thursday, October 29, 2009

WANA: Security forces have secured key area of Sherongai during ongoing operation Rah-e-Nijat against foreign militants in Shakai and Ladha areas.General Officer Commanding Major General Khalid Rabbani in a media briefing said eight-two militants have been killed whereas six security men have been martyred and 43 wounded during the action. He said security forces have secured the Sherongai area from Uzbek militants. Large number of Chechen, Uzbek and Turkmenistan militants is still present in Shakai Ladha area. He expressed hope that Kanigaram area will be cleared soon.

Pakistan are favourite vs Kiwis, says coach

Updated at: 2205 PST, Thursday, October 29, 2009

LAHORE: National team coach Intikhab Alam Thursday said the regular openers would be given chance in New Zealand series; however, this could be changed, if needed.Talking to media at Gaddafi Stadium here, he said Pakistan are favourite against the New Zealand in the series; however, the Kiwis would also try to prove that their Champions Trophy win was not an accidental one.The national cricket team coach said the players have been given the schedule for practice and matches and the new boys have been formally introduced to them.National cricket squad will leave for United Arab Emirates (UAE) on Friday and the first match would be played on November 3 in Abu Dhabi.

Federation, provinces must raise resources: Tarin

Updated at: 2336 PST, Thursday, October 29, 2009

PESHAWAR: Federal Minister for Finance Shaukat Tarin Thursday said it has been unanimously decided at National Finance Commission (NFC) meeting that the Federal and provinces should increase their resources.The fourth meeting of 7th NFC award was held here under the chairmanship of Finance Minister Shaukat Tarin.NWFP Finance Minister Humayun Khan, Sindh Chief Minister Qaim Ali Shah, Punjab Finance Minister Tanvir Ashraf Kaira and Balochistan Finance Minister Muhammad Asim Kurd and other members of the commission attended the meeting.Briefing the media following the meeting, Shaukat Tarin assured that constitutional rights of the provinces will be protected. However, he stressed, the provinces should also work on increasing their resources.He said headway has been achieved with regard to distribution of resources between Federal and provinces, as well as among the provinces. But, at the same, there are some differences and efforts are underway to sorted them out, he added.The next meeting of NFC will be held in Karachi on November 18 and 19.

India withdraws 15,000 troops from IHK

Updated at: 1910 PST, Thursday, October 29, 2009

NEW DELHI: India is withdrawing about15,000 soldiers from Jammu and Kashmir, a military official said on Thursday, in a move aimed at boosting prospects of peace talks with the disputed region's freedom fighters.India has been under international pressure in recent months to reduce tensions along its Pakistan border particularly Kashmir so that Islamabad could focus on fighting the Taliban on its western border with Afghanistan.But military analysts said the slight thinning of troops in the Jammu region was linked with ongoing efforts to resume talks with All Parties Hurriyat Conference rather than extending an olive branch to Pakistan.Kashmiri freedom fighters urged New Delhi to pull out troops, release prisoners and end alleged human rights violations after the Indian government offered to resume talks this month to end a two-decade insurgency.A military spokesman said one army division was being moved in a phased manner since September from the border districts of Rajouri and Poonch because of improvement in the security situation. It wasn't clear if these were troops deployed on the border or on internal security duties."The readjustment and relocation of troops is subject to security reviews and periodic assessment of ground situation," Lt. Col. Biplab Nath said.The troops who are being moved out are in the Jammu region and not the Kashmir Valley which is the centre of the revolt.Ashok Mehta, a retired army general and New Delhi-based strategic analyst, said the removal of troops was a goodwill gesture aimed at Kashmiri groups."The current de-induction of troops has nothing to do with the Afghanistan war," he said. The announcement of the troop movement came as Indian Prime Minister Manmohan Singh who is touring Kashmir said the security of the disputed region must rest in the hands of police."The responsibility for maintaining law and order in the state will be increasingly devolved on the Jammu and Kashmir police," he said.India moved about 4,000 soldiers from its Pakistan border in Kashmir in March. There are an estimated half a million Indian security personnel, including soldiers, deployed in Kashmir."Deployment and redeployment is based on threat perceptions and this particular army division has moved out as the situation is better," said Col S. Om Singh, another army spokesman.A faction of the All Parties Hurriyat Conference began a dialogue with the government in 2004, the first since the beginning of the insurgency, but it broke down two years later.