>> tom: a day of mixed economic signals. the u.s. economy expanded at a faster clip than originally thought in the third quarter, helped by consumer spending and strong exports. >> susie: but the federal reserve thinks that growth will be short-lived, and high unemployment will stick around we'll have analysis on what it all means for you."p you're watching "nightly business report" for tuesday, november 23. this is "nightly business report" with susie gharib and tom hudson.2; "nightly business report" is made possible by:

this program is made possible by contributions to your &eeu station from viewers like you. thank you. captioning sponsored by wpbt> susie: good evening, everyone. a sharp stock sell-off today after a surprise confrontation between north and south korea tom, the selling began at the opening bell on word that north korea fired artillery shells at a south korean island. >> tom: susie, that overshadowed some encouraging economic news.t the government says the economy grew by 2.5% in the third quarter. that made g.d.p. growth a bit faster than the first estimate of 2%. still, stocks sold off. the dow tumbled 142 points, the nasdaq lost 37, the s&p 500 off 17. >> susie: also weighing on the

markets-- a revised economic forecast from the fed. at the central bank's last meeting, policymakers downgraded their assessment of the u.s. economy for next year. economic growth of around 3.5%) is now expected, down from a 4% forecast; unemployment in the 9% range rather than 8%.]cfa and the fed marked up its inflation forecast. joining us now to analyze all this: robert doll, chief equity strategist at blackrock; and josh feinman, chief economist, deutsche asset management. welcome to the program. >> thanks, susie. >> hi, susie. >> susie: josh, let me begin with you. it looks like the fed is saying things are not getting better for the economy. what was your reaction to this downgraded outlook? >> pretty much as expected. i think it reflects the loss of momentum in the economy over the summer. and the fed has been

forecasting this all along. they're seeing that the economy is not getting;fn better fast enough to make quick progress in bringing down unemployment. and that's the reason that they feel they needed to give the economy an extra shot in the arm with the most recent easing. >> susie: -- >> susie, i agree with josh. i might just add we have this improvement in the u÷ what the first estimate was for the third quarter. frankly, i don't think anybody really believed the fed's numbers, and they were marking back to what most people were thinking, and most people are a little below the fed in terms of growth next year. >> susie: and bob, we learned how sharply divided the!+e fed is on how to fix the economy. what is this doing to investor anxiety? >> this is not new. it has been going on for months. it is certainly not a great confidence builder. we would like to see them say let's have our disagreements in the meeting, and when we're done, let's all move in the right direction.

i think it underscores how confusing the environment is, susie. we're in a muddle-through economy in my view. >>4ñ and muddle through really isn't good enough. we need to grow much faster on a sustained bases to repair the damage done during the recession. about the fed, there are disagreements internaling, but they're going to see this through. >> susie: and what about job growth, josh? we saw in today's g.d.p. report there are signs that corporate profits are very strong, at least they were over the last three months. does this mean that companies will feel that they can hire again now that they're making more money? >>:xp they're starting to. that. the private sector jobs are starting to increase. i think that will continue. i think it will slowly gather momentum. the problem is we've dug such a deep hole, we've got to grow faster, and we've got to increase jobs more quickly and sustain

that for several years, as least, to make up for the losses of the recession. to a lot of corporate managers, wha> i think a lot of them are concerned about how to plan for the future. they're concerned is it inflation or deflation. and that's why they're slow to add jobs. josh is right on the moneyment in so many economic statistics, you have good news and not so good news. the good news, we're going to hire more workers.98to the bad news, the unemployment rate will remain stubbornly high. >> susan: josh said they revised their inflation a little higher. deflation? >> i don't think thato6p is the central worry, but iby>h think deflation is going9kt to stay low. they mark it up a bit, but it is still below where they ultimately want to see it, consistent with price stability. we've got a lot of stair

capacity in the economy. and it will take a lot of whittle that down. >> susie: bob -- >> one of the big problems:a we had today, of course, was the european debt issue. that's a today deflationary sign. >> susie: bob, what should investors do -- not just about all of the economic data, but about all of the headlines. the skirmish between north and south korea. should they make changes in their portfolios or just sit tight? >> i think sit tight,q8zp susie. underlying this is a small in profits. to the extent that continues, and we think will continue right through next year, equity prices can grind higher. we can't ignore the macro the koreas, these are not

great things. but i would use the masagnist hit to therñ economy. >> susie: all right. thank you for all of your thoughts this evening. we appreciate all of you coming on the program tonight. >> great to be here. >> susan: we've been speaking with robert doll and josh feinmani,a of deutsche asset management. >> tom: here are the stories in tonight's "n.b.r. newswheel." we have new details on the government's massive insiderg trading investigation., money managers s.a.c. capital advisors, janus capital group, and wellington management have been asked for information about to the case. i'll have more on how all this affected the market coming up in i'll have more on how all this another big slump in home sales last month due to a foreclosure freeze and tighter lending. sales of previously owned homes fell just over 2% from september. the latest report card on banks shows hundreds of small lenders could be headed for trouble. the federal deposit insurance

commission's list of problem banks now stands at 860. but bank earnings continue to rebound. banks earned $14.5 billion during the third quarter, about $2 billion more than the same period a year ago. still ahead, warehouse wars. tonight's "shop talk" looks at what sam's club is doing to catch up to costco. >> susie: as we reported, the fed does not expect the u.s. unemployment rate to drop by much next year. now, that's discouraging news for the millions americans that many of them are dealing with social and economic issues that could impact their lives for years. suzanne pratt reports. >> reporter: the great recession is technically over, but for single mom zandya acosta, it's still going strong. she's been out of work more than two years, and worries about the effect her joblessness is having on her teenage son. >> we're in the process of

applying for high schools in the area and sending out applications for that process.úñ and he said to me that he didn't think he was going to go to college. and i said to him, why? and he said because he didn't think we can afford it. so, it's kind of seeping into his head now, and that bothers me. >> reporter: it bothers a lot of economists, too.7ñ they say if, as expected, the unemployment rate remainsá÷ e elevated for the foreseeable future, americans of all ages will be dealing with the fallout for years. the most obvious impact is to people's wallets. labor economist till von wachter studied large scale layoffs that resulted from the early 1980s recession. >> we find that workers have very large earnings loss in the short-term, and this is what other studies have found, as but what's surprising in our later, they haven't recovered their earnings, or they haven't caught up with similar

individuals who didn't lose their job during this period. >> reporter: wachter says that's because some workers switched careers entirely and had to learn new skills; others took time finding the right job; and still others were forced to take lower paying work. former administrative assistant karen clarke has been unemployed for more than a year. >> i've depleted everything, 401(k), savings, you namç!w everything is just gone. i've lived off of it as long as i could.zn it's really... it really got rough, i would say, in august. >> reporter: beyond the money, joblessness can have profound effects on health, families and marriages. the center for work life policy in new york city is examining college-educated members of generation "x". it includes people ages 32 to 45. economist sylvia ann hewlett says this group feels stalled in their careers because so many baby boomers are still in theññ workforce, thanks to the

she says the somewhat surprising result is that 43% of generation "x" college educated women do not have children. >> many of them are getting married. you know, marriage rates arepht at the 60% or 70% level. so, there's a whole lot of couples out there who are reall deciding that they can't have it all. they can deal with a job and perhaps making a partnership work, but having kids is perhaps a real luxury. >> reporter: and so, too, is good health. historic data has shownnjlijpmog americans who have experienced periods of unemployment. >> what we do find is that there's a high correlation between the size of the earnings loss and an increase in the risk of death. now, that doesn't prove causality. but certainly, it seems to be that, as individuals settle into lives with lower income, they may live less healthy, they may have less health insurance. they may spend less on their zave less health insurance. >> reporter: the longe

economic slump persists, the worse the effects of long-term joblessness. and many americans will still feel those effects long after the economy fully recovers. suzanne pratt, "nightly business report," new york. >> tom: the exchange of military firepower on the korean peninsula is just the latest global worry for investors, leading to today's stock sell- off. let's get you updated in tonight's "market focus."

in addition to the korean conflict, worries about ireland's bailout and the ripple effect across the euro-zone continue. we'll begin with the south korean exchange traded fund, e-w-y. with the military action today, the fund fell more than 5% on heavy volume. this is a one month low. spanish stocks fell, with its e.t.f. shedding another four and a 0.5% today.[t@ it's at a three-month low over worries about its banking and government balance sheets.$ñ and a broad measure of the 50 largest stocks in the euro-zone fell by 4%.j:b all of these global concerns led to a pop in the fear gauge of u.s. stocks, the chicago board options exchange volatility index. it jumped 12%. remember, a rising index usuall3 means investors are willing to pay more for option protection, indicating worries that stock prices may drop.o+sd a couple of economically sensitive sectors led the way e.t.f.s fell by about 2% each. oil prices fell slightly today. the overhang of the europeanko worries and now the korean situation fuels questions about commodity demand.

for the third session in a row, financial stocks were under pressure. among those falling, mutual fund manager janus capital dropped another 3%. it is among the latest investment advisers and hedge funds to receive questions from federal prosecutors about the developing insider trading investigation. janus says the inquiry was for general information and it is some more retail optimism ahead of black friday and the holiday season today from a couple of shoe stores. brown shoe runs famous footwear its latest quarter beat the street, and it's outlook was better than expected. shares jumped 16% on almost ten times their usual volume. the drop-off in august came when it issued a disappointing outlook.zñ t,ó shares to a three year high. it also had stronger than anticipated earnings and guided higher. a buyout in retail-- j. crew. it will go private, even as it cut its earnings projections for the year. it is a $3 billion deal on firms and j. crew's chairman and

c.e.o. shareholders will get $43.50 per share. shares closed above the buyout price, indicdlpng the market thinks a higher price may be to come. finally, some technology movers$ >> tom: this stems from a copyright infringement lawsuit. s.a.p. says it will pursue all options after the verdict, including possible appeal. it frgd oracle only owned $41 million, and oracle was asking for up to $3 billion. the stocks were mixed the verdict hewlett-packard was the single dow industrial stock to clock in with a gain today, up 2%. brocade communications' disappointing outlook led to heavy volume and this 10% fall. and voice recognition software maker nuance saw eight times its usual volume, jumping 4%.mé#ñp.@ this morning, apple retired co- founder steve wozniak told a web site apple bought the company.

but he later said he got it "totally wrong." last f!unuance issued an encouraging outlook. and that's tonight's "market focus." >> tom: cheapjveú telus and d.v.d. its are not the only game in town come black friday for shoppers or investors. supporting goods retailers come in to his holiday season swinging away. tonight's word tonight is

retail. michael barron, welcome to "nightly business report." nice to see you. >> thank you for having me. >> tom: retail sporting goods are among the best performing, why is that? >> people keep buying industry has gotten more efficient. dick's sporting goods has revolutionized things. >> tom: you mentioned dick's, and this has been among the leaders. recent better than expected earnings performance fueled the stock to a new 52-week high. and hibits, a nice rally. dick's up 58%, and hick's up 59%. >> in the five years presiding the financial crisis, i think the average compounded annual growth rate was 2%. the crisis was tough, but it made these companies

step up their game and manage inventory better. >> tom: those are the individual stories, and what about consolidation to drive some of the economies to scale? >> not so much for dick's, dick's is the industry leader. hibit is smaller. they're in the southwest region and could be take out by a dick's. >> tom: and it has a different retail strategy. it likes to partner with big retailers. >> they look for a really strong anchor store, and they get into the same strip mall. they look for a wal-mart and benefit from the traffic. >> tom: you might as well go where the shoppers are. let's go to footwear, a smaller one has had a nice rally here lately. and stock a little down today. but up 92% over the past 12 months. meantime, footlocker

amongst the leading footwear retailers, up 80%. what's the fuel here? >> the finish line has kind of a bit of challenge. they're trying to grow the top line. their growth yea year-over-year was 1%. and the average has been about 5% to 10% for the rest of the names. they have a bit of a( challenge. footlocker is so much bigger, and any incremental increase is good for their bottom line. >> tom:c"cc can we expect to more fn footwear in the finnish stores? >> i think that's we're theory moving. they style themselves at sneakerologists. and they're trying to mix in the inventory a little with actual equipment and that could make a difference. >> tom: any ownership or

possession in these four? >> not at all. >> tom: and you can read michael's article in the thestreet.com. >> susie: here's what we're watching for tomorrow: quarterly results from deere and company and tiffany. also tomorrow, new home sales for october. and consumers are expected to leave the plastic at home this holiday season and shop with cash.'rio we'll look at the strategies retailers use to get shoppers to part with their money.d yu another product recall by johnson and johnsks this time, five million packages of children's benadryl, children's motrin, and rolaids are being taken off store shelves because of manufacturing problems. the products were made at a plant in pennsylvania that closed earlier this year due to quality control issues. j&j has had a string of recalls recently, many from production problems at that plant. >> tom: reports say general motors is rehiring almost 200

laid-off workers at a plant in flint, michigan. a formal announcement is expected tomorrow from the auto maker. the associated press says the rehired employees will be making auto engines for chevrolet's volt and cruze models. g.m. now makes those engin/+in austria, but it is outfitting a plant in flint to take over that manufacturing.

>> susie: as americans get ready for thanksgiving, many will be doing their shopping at warehouse clubs. sam's club, which is owned by wal-mart, knows shoppers come for value. but as erika miller explains in tonight's "shoptalk," the company hopes technology will be another incentive to shop there. >> reporter: jeffrey bradshaw shops at sam's club four times a week. as he walks around the store, he carries a special shopping list. it's a printout of discounts, created especially for him based on past purchases. >> you get a dollar or two off your $16 or $17 items, and it helps in the economy we have today, absolutely. >> reporter: for customers, the e-values program means extra savings; for sam's club, it means extra revenues.éi to take part, shoppers must buy a more expensive "plus"-level membership sam's club c.e.o. brian cornell

says e-values also entice members to spend more. >> it's not like the coupon book you might see from other retailers, or just the sunday flyers. when we talk to you about offers, we already know they are categories you are interested in. they're products we know you are going to be interested in, and seeing a much bigger response because of that. >> reporter: sam's club also recently installed wi-fi in all of its stores to encourage customers to use its new mobile app. using smartphones, they can scan any bar code in the store and get more product information. wi-fi also makes it easier for customers to shop competitors eeujqqp&s. >> actually, i hope they do. because in a transparent pricing environment, i'm really confident sam's club wins. >> reporter: often, members want to get in and out as quickly as possible. that's why sam's club recently introduced a click 'n' pull program. it lets customers place an order online, sam's pulls the items from the shelves, and has everything waiting for pick-up.

these changes are not just designed to keep members coming back. sam's club also hopes to lure customers away from rivals. sam's club is the largest warehouse chain in terms of number of locations, but not in terms of sales. costco is the industry leader in revenues and sales per square foot. analyst brian sozzi says that's because costco is more popular with upscale households. >> the core customer at costco is higher income. that's always been my takeaway. and costco does seem to have a greater share of wallet, just because they are more focused on the consumer. >> reporter: to broaden its appeal, sam's club is rolling out a new store layout nationwide with wider aisles and a beefed up fresh foods department. >> it's one of the most important parts of our future. the members that we've talked to say they really want to see more variety in their fresh assortment. we've made a big commitment to elevating quality in our meat department, expanding selection in our produce department.#&

>> so let's check out sam's. that gives members personalized discounts, wi-fi in stores, and the ability to place internet orders for pick-up. while sam's lags costco in sales, it is rolling out a new store format to attract new customers. with shoppers like jeffery bradshaw, the strategy seems to be paying off. he says the store often knows what he wants to buy before he does. >> i pretty much buy what i need, but usually things are on sale, the regular staple items are on sale. we take advantage of that. >> reporter: erika miller, "nightly business report," >> susie: that's "nightly business report" for tuesday, november 23. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:8khp

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