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WASHINGTON (AP) -- President Barack Obama said Saturday that reports the economy is growing again and that more than 1 million jobs were saved or created by his stimulus plan show "we are moving in the right direction."
But he tempered his upbeat message with a cautious word about further job losses and progress yet to be made.
Unemployment hit a 26-year high of 9.8 percent in September, and the October report due next week could show it topping 10 percent.
The government reported this week that the economy grew 3.5 percent from July through September, the first signs of growth in a year and unofficial confirmation that the economic slide that began in December 2007 is over. Separately, the White House said Obama's $787 billion stimulus plan - a mix of spending and tax cuts - had saved or created more than 1 million jobs.
That news, "while not cause for celebration, is certainly reason to believe that we are moving in the right direction," Obama said in his weekly radio and Internet address.
"It is easy to forget that it was only several months ago that the economy was shrinking rapidly and many economists feared another Great Depression," the president said.
Obama's assessment came a day after an independent federal board reported that nearly 650,000 direct jobs have been saved or created because of stimulus program money provided to businesses, contractors, state and local governments, nonprofit groups and universities.
The new data released late Friday represents 156,614 federal contracts, grants and loans worth a total of $215 billion that went to more than 62,000 recipients. The largest number of jobs were created or saved by state ! governme nts. About half of the reported jobs were among teachers and other education employees. With state budgets in crisis, federal aid helped governors avoid major cuts in education, which officials said spared many teachers and school workers from the unemployment line.
The 1 million jobs cited by Obama include those from direct economic assistance, plus those linked to the economic boost from $288 billion in tax cuts under the stimulus program, according to White House economic adviser Jared Bernstein.
Republicans expressed doubt on the administration's job-creation claim. GOP Senate leader Mitch McConnell described the jobs reports as "bewildering" when 3 million jobs have been lost since Congress approved the stimulus program.
In his address, Obama acknowledged that economic growth is no substitute for job growth. He also telegraphed what is expected to be sour unemployment news when the October figures are released next Friday, saying: "We will likely see further job losses in the coming days."
"But we will not create the jobs we need unless the economy is growing," he said.
Job creation also depends on the willingness of consumers to open their wallets and purses. But on Friday, the Commerce Department reported a 0.5 percent decline in consumer spending in September. It was the first drop in five months and the biggest since last December.
Obama said his administration has taken steps to help get credit to people and businesses of all sizes, stem home foreclosures, cut taxes, create jobs and help people who need it, such as seniors and the unemployed.
"So we have made progress," he said. "At the same time, I want to emphasize that there's still plenty of progress to be made. For we know that the positive news for the economy as a whole means little if you've lost your job and can't find another, if you can't afford health ca! re or th e mortgage, if you do not see in your own life the improvement we are seeing in these economic statistics."
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NEW YORK (AP) -- Evidence that consumers are still holding off on spending drove stocks lower Friday, tempering enthusiasm from the day before over the economy's growth in the third quarter.
Major stock indexes fell more than 0.5 percent in morning trading, giving back a chunk of the previous day's big gains.
Investors shed stocks after the Labor Department said personal spending fell 0.5 percent in September. Though the decline was in line with forecasts, it was the largest drop in nine months and followed a 1.3 percent jump in August fueled by the government's popular Cash for Clunkers car rebate program.
A drop in the mood of consumers was also discouraging. The Reuters/University of Michigan consumer sentiment index fell to 70.6 in October from 73.5 in September. The reading was revised slightly higher from a preliminary estimate of 69.4 earlier this month, and was roughly in line with expectations.
The market is paying close attention to indicators of consumer spending, which is still in a slump despite improvements in other parts of the economy such as manufacturing and housing. Spending by consumers makes up a major part of the U.S. economy.
The Labor Department also reported Friday that personal income, the fuel for future spending, was flat in September compared with the previous month, in line with expectations. A lack of income growth is due, in part, to ongoing high unemployment rates, also a major worry for the market.
On Thursday, investors cheered a government report that the economy grew at 3.5 percent in the third quarter after four straight quarters of declines. It was the most promising evidence yet that the longest recession since the 1930s ha! s ended. The news boosted the Dow Jones industrials 200 points - its best one-day performance since July. But many economists worry that much of GDP growth came from government stimulus measures and that weak spending by consumers will continue to hold the economy back.
"There's a lot of people out there thinking that if it wasn't for the stimulus we wouldn't have seen such a big number," said Todd Salamone, senior vice president of research at Schaeffer's Investment Research.
He said some investors may be reassessing the GDP number, believing that the market may have overreacted on Thursday.
In late morning trading, the Dow fell 80.41, or 0.8 percent, to 9,882.17. The Standard & Poor's 500 index fell 9.31, or 0.9 percent, to 1,056.80, and the Nasdaq composite index lost 11.80, or 0.6 percent, to 2,085.75.
Nearly three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 294.3 million shares, compared with 390.9 million at the same time a day earlier.
In other trading, the Russell 2000 index of smaller companies fell 7.78, or 1.3 percent, to 572.44.
Bond prices rose as stocks fell. The yield on the benchmark 10-year Treasury note fell to 3.45 percent from 3.50 percent late Thursday.
The dollar gained against other major currencies, making commodities less attractive to foreign buyers. Gold prices slipped about $6 to $1,040 an ounce on the New York Mercantile Exchange, while oil prices tumbled $1.52 to $78.35 a barrel.
With GDP coming in stronger than expected, analysts said investors will likely turn their attention to next week's October employment report for the next indicator of how the economy is doing. Another big loss in jobs could upset the market's optimism.
"We need a follow-through now," said Bryan Place, president of Place Financial! Advisor s in Manlius, N.Y. "How much of that (growth) is continued if jobs don't follow behind it?"
Overseas, Japan's Nikkei stock average rose 1.5 percent. In afternoon trading, Britain's FTSE 100 fell 0.5 percent, Germany's DAX index dropped 1.2 percent, and France's CAC-40 declined 1.2 percent.
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