Economic Outlook: Gains without jobs

U.S. Federal Reserve policy makers took a rosier view of the economy at an Aug. 11-12 meeting, but held back on the nagging question of new jobs.

Amid a flurry of improved data, the Fed said "overall economic activity was stabilizing."

The meeting minutes had some chipper pronouncements. "A sizable pickup in motor vehicle production appeared to be under way," the Fed said. "Housing activity was beginning to turn up."

Undercutting the good news, although job losses have slowed, "conditions in the labor market remained poor." In addition, businesses appeared to be "cautious" on the possibility of adding jobs, the Fed said.

The Organization for Economic Cooperation and Development also sounded a more upbeat note with a release Thursday that included noticeably better growth projections for developed nations than it estimated just three months ago.

The OECD pointed to low inflation and improvements in financial markets, although "bank lending continues to decline."

Housing markets have improved and manufacturing looked poised to turn a corner as "inventory changes may no longer be a drag on growth," the report said. In addition, "global trade appears to have reached a trough and is poised to accelerate."

What are the numbers? In the euro area, a previous forecast of a 4.8 percent drop in the gross domestic product was revised to a 3.9 percent decline. In Japan, the forecast was revised from a 6.8 percent decline to a 5.6 percent dip. The U.S. GDP projection held steady at a 2.8 percent contraction for the year.

While the numbers show improvements, economist Peter Morici at the University of Maryland says it takes stronger numbers to produce jobs. And the numbers, he said, are daunting.

Adding in U.S. workers who have given up looking for jobs -- those not counted in the 9.4 percent unemployment rate -- and the U.S. unemployment rate is more than 17 percent, Morici said.

More than 6.5 million jobs have been lost since the recession began in December 2007 and the $787 billion stimulus package is on track to add 3 million jobs -- a temporary solution and not enough to replace what has been lost, he said.

Investors Friday will look at the Labor Department's monthly unemployment figures. Economists predict a slight uptick to 9.5 percent.

In Asian markets, the Nikkei 225 in Japan fell 0.64 percent Thursday. The Hang Seng index in Hong Kong added 1.23 percent. The Singapore Straits Times index gained 1.11 percent, while the S&P/ASX index lost 0.19 percent.

In midmorning trading in Europe, the FTSE 100 in London rose 0.34 percent, while the DAX 30 in Frankfurt rose 0.61 percent. The CAC 40 in Paris advanced 0.41 percent, while the broader DJStoxx 600 rose 0.69 percent.