Economy

WASHINGTON - The U.S. economy is a study in contrasts. The housing, banking and auto industries are surging back to health, and that has helped push the stock market to a five-year peak. Higher prices for homes and stocks tend to make people feel wealthier and spend more. Yet, unemployment remains high and hiring modest. The end of a Social Security tax cut is shrinking already flat pay. Federal budget fights have put businesses and consumers on edge. Balanced between those tailwinds and headwinds, the economy is struggling to accelerate.

WASHINGTON - Americans are growing more pessimistic about the economy and handling it remains President Obama's weak spot and biggest challenge in his bid for a second term, according to a new Associated Press-GfK poll. And the gloomier outlook extends across party lines, including a steep decline in the share of Democrats who call the economy "good," down from 48 percent in February to just 31 percent now. Almost two-thirds of Americans - 65 percent - disapprove of Obama's handling of gas prices, up from 58 percent in February.

The U.S. economy grew at a 4.2 percent annual rate in the first quarter. The rise in the nation's gross domestic product, the value of all goods and services produced, was a slight improvement over the 4.1 percent increase in the fourth quarter, the Commerce Department said yesterday. Also yesterday, the Labor Department said new filings for jobless benefits fell by 18,000 in the week ended April 24 to 338,000. In Pennsylvania, new claims dropped by 3,577 for the week ended April 17 to 20,197.

Pennsylvania's economy is showing some positive signs and could be ready to pull out of the recession, but "ominous" signals from the national economy threaten to dampen such a prospect, state officials said yesterday. The news about the economy from Budget Secretary Michael H. Hershock and Revenue Secretary Eileen H. McNulty was better than previous reports in that it was neither all bad nor entirely good. It was contradictory. For instance, McNulty said November employment, though nothing to brag about, was higher than the same month a year ago and could be a sign that "we might be creeping out of this recession.

Problems in Iraq, a soaring federal budget deficit, and a sluggish economy are turning political superman George W. Bush into a vulnerable politician who could lose his reelection contest next year. Public approval of his job performance, while still high, has slipped. Anxiety about Iraq is growing. Questions about his handling of the economy linger in the background. Some Republicans confess they are a little worried that events could hurt their chances next year. Democrats are uniting in opposition.

Most everyone knew it was bad. But probably not many realized that during the first quarter of 1991, Philadelphia's economy had sunk to its lowest point in five years. That's according to Grant Thornton, a national accounting and management consulting firm with offices in Philadelphia. The slump marked the fifth consecutive quarter that the company's local economic index has shown a drop for Philadelphia. "What it means is that we are on a continual downtrend," said Paul D. Neuwirth, managing partner of Grant Thornton's Philadelphia office.

President Obama's chief political strategist David Axelrod blamed last week's worse-than-forecast job numbers on Congress' failure to act on the administration's job-creation proposals. "If you look at this jobs report, manufacturing is up, the best record in two decades, largely because of what the president did relative to the auto industry," Axelrod said Sunday on CBS's Face the Nation . "What was down was construction, what was down was education - the very things the president has been trying to get Congress to act on were the things that were down.

WASHINGTON - Americans are growing increasingly optimistic about the future of the U.S. economy, and likely voters trust Republican Mitt Romney slightly more than President Obama to do a better job of managing it, an Associated Press-GfK poll shows. On the cusp of an election offering stark choices on how best to handle the economy, 60 percent of Americans still describe the current economic situation as poor, but almost as many think things will get better in the coming year. More voters expect the number of unemployed to go down, too. Forty-two percent anticipate improvement in the jobs picture, up 10 percentage points from a month ago. For all of the shifting dynamics in economic expectations and voters' growing comfort with Romney, though, the presidential race is still a virtual dead heat, with Romney favored by 47 percent of likely voters and Obama by 45 percent, a result within the poll's margin of sampling error.

If a president could improve the economy, he would. If a president could prevent the economy from going into the tank, he would. Just ask Jimmy Carter. If, as president, Carter could have dictated an interest rate in the single digits, he would have - rather than enduring the 16 percent and 18 percent and 20 percent the nation experienced leading up to the president's bid for reelection. If, as president, Carter could have waved a wand and eliminated the gasoline lines that tormented American motorists, he would have - rather than enduring the humiliation and frustration of watching the national news every night, showing video of cars lined up, seven lanes across, around the corner and down the street waiting to top off their tanks.

Determined to deliver the healthiest possible economy to George Bush on Election Day, the Reagan administration is making plans to keep its top economic management jobs in the hands of the vice president's closest political confidants. Currently, economic policy is being run by Treasury Secretary James A. Baker 3d, a longtime friend and political adviser to Bush. But Baker, a fellow Texan who managed Bush's 1980 presidential bid and was chairman of the GOP general election campaigns in 1976, 1980 and 1984, is expected to resign this summer to again run Bush's presidential campaign, campaign sources say. Yesterday, Baker told reporters questioning him about his plans, "For now, my job is at the Treasury Department.