White House: U.S. Has Avoided Depression

A White House spokesman said Wednesday that the United States has avoided falling off an economic cliff, citing as evidence a  new report showing factory orders rose in June for the fourth time in five months, an unexpected gain and the latest sign that the ailing manufacturing sector is recovering.

"We have pulled far back from the edge of descending into another economic depression," White House spokesman Robert Gibbs.

But new figures to be released Friday will likely show a rising unemployment rate, possibly to more than 10 percent.

The Commerce Department said Wednesday that factory orders rose 0.4 percent, after a 1.1 percent increase in May. Economists expected a 1 percent drop, according to a survey by Thomson Reuters.

A 2.7 percent rise in orders for nondurable goods, such as chemicals and textiles, was the most since June 2008 and drove the overall increase. Orders for petroleum and coal products jumped 13.2 percent, as the price of oil rose. Wholesale oil prices rose 18.5 percent in June, according to economists at JPMorgan Chase & Co.

Orders for durable goods, big-ticket items such as aircraft and appliances, fell 2.2 percent. Commercial aircraft orders, a volatile category, fell 38.6 percent after rising 60.4 percent in May.

Still, there were signs of strength in durable goods. Orders for cars and auto parts rose 1.5 percent, and orders also increased for iron and steel mills and construction machinery.

Orders for non-defense capital goods excluding aircraft, a key measure of business investment, rose 2.6 percent, the second consecutive increase.

Other recent news on manufacturing also has been positive. The Institute for Supply Management, a trade group, said Monday that manufacturing activity in July contracted at the slowest pace in almost a year.

The institute's index of manufacturing activity was 48.9, up from 44.8 in June. Readings below 50 indicate that economic activity contracted, but the survey's chair expects the figure will top that threshold next month for the first time since January 2008.

The auto industry is benefiting from the government's "cash for clunkers" program, which has spurred thousands of people to trade in older vehicles for new cars.

Ford Motor Co. said this week that its sales rose 2.4 percent in July from the same month last year, its first year-over-year increase since November 2007. Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by "clunkers" deals. GM's sales fell 19.4 percent, a slower pace than earlier this year.

But if a recovery is right around the corner, a rebound in the job market appears much farther off.

Overall, unemployment in the United States hit 9.5 percent in June, the highest level in 26 years.

New monthly numbers come out Friday, and the White House has been trying for weeks to set expectations that joblessness will worsen before it gets better.

President Obama previewed the next jobs report this way: "It's likely to show that we're still continuing to lose far too many jobs. As far as I'm concerned, we won't have a recovery until every American who wants a job can find one. But history does show that you need to have economic growth before you have job growth."

And on that front, there is some positive news.

The economy shrank at a 1 percent rate in the April-to-June second quarter, new figures show -- another contraction, but a sharp upgrade from the 6.4 percent slumps in the first quarter and a 5.4 percent decline in the fourth quarter of 2008.

The Associated Press contributed to this report.