Recession May Be Loosening Grip on Economy

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A growing list of evidence indicates the economy may be starting to emerge from the longest recession ever to plague the U.S. since World War II.

A government consumer spending report released Friday may include the first hint that there is light at the end of the tunnel.

With the help of the popular Cash for Clunkers program, personal spending increased in July by 0.2 percent. That follows on heels of a 0.4 percent gain in June.

"The big surprise in this report was that there was enough spending in the consumer sector and elsewhere to offset all the loss from inventory reductions," said Nigel Gault, chief U.S. economist at IHS Global Insight.

Despite the economic growth expectations, businesses will likely keep a tight reign on labor costs until there is stronger evidence the growth will continue. 

According to White House economist Christina Romer, the unemployment rate will still likely reach ten percent this year.

Meanwhile, Federal Reserve Chairman Ben Bernanke said that the economy seems to be "leveling out" and expects that growth will begin again soon.

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