steve handlesman has this story. >> reporter: customer service rep, tammy banks fueled up in a grumpyd. >> gas prices are too high. >> reporter: $3.29 here in d.c. on average, nationwide, the highest in more than ftwo years. 3:10. >> normally, it would be like $20 to fill up my car. now, it is like $35. >> reporter: grocery prices are up. inflation is a new word. >> it lowers our purchasing power, it lowers standards of living. eventually, that inflation begins to interfere with economic growth. >> reporter: aside from fuel and food, inflation is not a big factor said cnbc's steve liesman. >> we look for our prices overall going up. that is not the case. as long as unemployment remains well north of 9 pe%, it is difficult to have a generalized inflation problem. >> reporter: retail sales were up and other manufacturing. bankers forecast new jobs this year will double to 2 million. >> clearly, an improvement as economic growth is faster. that is enough to take a small bite out of the unemployment rate. baby steps in the right direction. i'm steve handlesman, nbc news, washington. >> we

steve handlesman reports from washington on how the old barack obama may be back. >> reporter: he got back with many feeling good about his message. >> showed a lot of compassion and i think it was from the heart. >> reporter: the president called the nation to a better place. >> make sure that we're talking with each other in a way that heals. not in a way that wounds. >> reporter: it was the barack obama who'd won the white house. >> there was emotional investment in the speech that we haven't seen and i think the broad themes of civility and national healing really played to his strength. >> reporter: since the president's party loss in the midterm election, he won a tax deal with republicans, won a repeal of don't ask don't tell, won ratification of the s.t.a.r.t. treaty. two polls before the speech last night put the president at 42 and 50%. >> improvements in our civil discourse and how we debate issues will certainly play a role in this year's state of the union. >> reporter: the union's been wounded, the president seen as a healer. >> the longer he can keep this kind of enviro

steve handlesman has the latest. >> reporter: the day before his state of the union address, president obama staged an event to make clear he will not just call for spending cuts. >> we are upping our game. >> reporter: he promised military families new programs to reduce suicides and homelessness. >> the readyness of our armed forces depends on the rediness of our military families. >> reporter: a large version of that message will dominate the state of the union like it did last year, that the readiness of america depends on government infrastructure, education, more spending, but the president will also call for deficit reduction. >> steps that we need to take to get our fiscal house in order will be something you'll hear a lot of discussion on this year, yes. >> reporter: to beat mr. obama to the punch, house republicans say tomorrow, they'll vote to cut spending 10%. >> we have a national debt of over $14 trillion, a mind boggle, incomprehensible figure. >> reporter: liberals claim cuts would layoff 40,000 teachers and cut college aid $13,000 per student. they want cuts in the pen

i'm steve handlesman, nbc news, capitol hill. >>> captain owen honors was relieved of his command tuesday of the "uss enterprise" and reassigned of other duties over a scandal while he served in his command. in a news conference, the navy explained the firing saying honors showed a failed lack of good judgment and professionalism when making videos containing simulated sex acts and gay bashing. the navy is continuing to investigate including the actions of other senior officers who knew about the videos and what action was taken in response. >>> a federal court in san diego has ruled that a san diego memorial is unconstitutional. the court called the cross "a government endorsement of religion," but stopped short of calling for its removal. the unanimous ruling is the latest battle on behalf of a decade-long war battle. >> now here's a look at other stories making news early today in america -- in california, four burglary suspects are in custody after leading police on an hour-long chase, topping speeds of up to 100 miles per hour. the pursuit began after a woman called police to report

i'm steve handlesman reporting. now back to you. >> people in california are just getting ready to begin their new year's eve celebrations. other countries already brought in the year 2011. a million and a half people came out to sidney harbor to watch the show. people in new zealand were the first to countdown to the new year and in tokyo partiers released thousands of balloons to mark the event. >>> now tonight at 5:00, gavin newsom doesn't know the exact date when we'll be sworn in as lieutenant governor but in true san francisco fashion he's announcing the date of his post-inauguration party. the celebration is set for january 10th at 1:00 p.m. in the state capitol rotunda. his swearing in ceremony will be on or before that date. while the governor-elect and other officers will be sworn in on monday, newsom's people say he has some ends to tie up in san francisco where he's ending his term as mayor early to take the job in sacramento. >>> a san jose homeowner shot a suspected burglar outside his home this mornin