Obama says new data shows economy recovering

President Barack Obama speaks at the signing of the Ryan White HIV/AIDS Treatment Extension Act of 2009 in the Diplomatic Reception Room at the White House in Washington, October 30, 2009.

WASHINGTON (Reuters) - President Barack Obama said on Saturday this week's positive job and economic growth figures proved that his big spending efforts to stimulate the economy were working.

But he cautioned in his weekly radio address to Americans that "we have a long way to go before we return to prosperity" and more job losses were likely in coming days.

Democrats and Republicans agree the economy will be the top issue for the 2010 congressional elections, although the White House has disputed suggestions that they will be a judgment on Obama and his policies.

Voting in next week's Virginia and New Jersey governors' races will render a first judgment on Obama, who was sworn into office just over nine months ago in the midst of the worst recession since World War Two.

The U.S. unemployment rate remains stubbornly high at 9.8 percent, despite a $787 billion economic stimulus that Obama and his fellow Democrats, who control Congress, pushed through in February.

New unemployment numbers due out next Friday are expected to show U.S. employers cut 175,000 jobs in October, according to economists polled by Reuters. The unemployment rate is forecast to rise to 9.9 percent for October.

But new data this week showing the U.S. economy growing in the third quarter for the first time in more than a year, signaling the end of the worst recession in 70 years, was good news for the Obama administration.

"Now, economic growth is no substitute for job growth," Obama stressed in his radio address. "But we will not create the jobs we need unless the economy is growing."

REPUBLICANS QUESTION FIGURES

Obama said steps taken by his administration to jump-start the economy, including the stimulus package of spending and tax cuts, had helped "blunt the worst of this recession."

The White House said on Friday the stimulus had directly saved or created more than 640,000 jobs so far, based on data about who had received loans or grants through the American Recovery and Reinvestment Act.

Obama said overall the stimulus had created or saved more than one million jobs.

"It took years to dig our way into the crisis we've faced. It will take more than a few months to dig our way out," said Obama, who blames Republicans for the economic crisis he inherited.

Republicans, who favor tax cuts, say the stimulus has failed to halt rising joblessness and they also questioned the White House's figures on jobs saved or created.

"It's bewildering to see the same administration that sold its trillion-dollar spending plan this spring as a guarantee against 8 percent unemployment -- today it's nearly 10 percent

-- claiming it created 1 million jobs, especially since it is a sad fact 3 million jobs have been lost since the stimulus was signed into law," Senate Republican leader Mitch McConnell said in a statement.

(Reporting by Ross Colvin, editing by Alan Elsner)