The owner of a plastic molding firm in Batavia feels the shift. A caterer in Lisle doesn't.

The government says the economy grew in the July-to-September period, snapping a streak of four straight quarters of economic contraction that brought the U.S. to the depths of recession and the cusp of a financial meltdown.

Stocks rallied on the better-than-expected report, with the Dow Jones industrial average rising 199.89 points, to close at 9962.58, its best day in 3 1/2 months.

But the glimmers of hope contained in Thursday's economic news are not the stuff of widespread warmth.

The federal government's rebates for car purchases and its $8,000 tax credit for first-time homebuyers fueled much of the economic expansion, which clocked in at a 3.5 percent annual growth rate for the third quarter.

"What we don't know is if you can kick-start the economy like a dead battery and get it going," said Brian Battle, vice president with Performance Trust Capital Partners in Chicago.

Even with the improvement triggered by the government stimulus programs, there's a long way to go until the national and local economies can be declared healthy again. While there are signs of hope for some manufacturing firms, a question mark continues to hover over sectors that rely on consumers feeling flush -- among them retail, hospitality and real estate.

Dave Miller, owner of Chef By Request Catering in Lisle, sees no signs of a rebound yet.

"If it's working, it's minimal," he said. "Where you have the upper echelon of food service, instead of your lamb chops, they're doing chicken and smaller fillets."

So far he has resisted layoffs among his 11 employees, phasing out only two part-time positions.

"My wishful thinking tells me by the second quarter of 2010, people might be ready," he said. "People are eventually going to get tired of being reserved and being tight with their money."

A number of economists, worried that consumer spending will fade without the government stimulus, are predicting weaker expansion in the fourth quarter and next year, in the 2 to 3 percent range.

While retail spending has come back a bit, it remains bargain-oriented, said Diane Swonk, chief economist at Mesirow Financial. "The high end on Michigan Avenue is still struggling."

In contrast, some manufacturing-oriented firms are experiencing some upswing.

Jim Vassar, owner of Fidelity Tool & Mold, which employs 30 people in Batavia, said sales have returned to 2008 levels after weakness in the first half of this year.

The company makes molds used to mass-produce plastic bottles, a business that is fairly recession-proof. But economic uncertainties made customers less willing to spend on new product designs, resulting in fewer mold orders, he said.

"People just held their breath for a while," Vassar said. "Now they are doing more prototyping and 3-D design."

U.S. manufacturers that export to overseas markets saw a surge in business, helped by a cheaper dollar. Exports rose at an annualized rate of 21.4 percent in the third quarter, the most since the last quarter of 1996.

Observers say the trend could help such Illinois firms as Peoria-based Caterpillar Inc. and Moline-based Deere & Co., both of which recently announced plans to recall some laid-off workers. If the region's exporting manufacturers see business pick up, "it could be an important offset to the continuing struggles in the auto industry," Swonk said.

Ray Whitacre, senior vice president for middle-market commercial banking for Harris Bank in Chicago, said he's seeing "a bit more optimism" among his clients.

"Folks on the front end of manufacturing have started to see a modest gradual pickup," Whitacre said.

Modest revivals in manufacturing are not expected to trigger any big surges in jobs, however, given the movement of factories overseas and increased worker productivity.

Chicago-based Littelfuse, whose products include automotive and electrical fuses, is seeing some recovery in sales, though not to 2008 levels. But Phil Franklin, its chief financial officer and treasurer, doesn't expect much hiring back of laid-off workers.

"We're finding that maybe we can run the business effectively with fewer people," he said.

Indeed, the country's unemployment rate, which reached a 26-year high of 9.8 percent last month, is expected to top 10 percent and remain high for some time.

Some businesses intend to rebuild staffing levels but are holding off until they feel more confident.

Firebelly Design, a graphic design firm in Humboldt Park, laid off three employees in March, the first cuts in its 10-year history, according to owner Dawn Hancock.

Now, clients are starting to pull the trigger on projects, she said, and "we're busy enough that we could use another person in here, but it's kind of scary."

She's leaning toward finding freelance help. A great deal of uncertainty continues to swirl, in spite of Thursday's positive gross domestic product report.

While spending on housing was up for the first time since the end of 2005, some observers question whether the uptick will continue if the government does not renew the tax credit for homebuyers, which expires Nov. 30.

And locally, the commercial real estate market "is more of an Achilles' heel than in other parts of the country," Swonk said.

"We had a lot more projects coming online late in the game, so we had overstock as the economy collapsed," she said. "This is a worry because of potential collateral damage on banks' balance sheets."

And it's a worry for brokers trying to make a living getting deals done.

Jeremy Kudan, a commercial real estate broker who focuses on restaurants, bars and retail locations, said October was a good month for him, with more than five deals closing. But it took a long time to get them done, and they worked only because there were strong cash buyers, he said.

Looking ahead, he's pessimistic.

"With the job market where it is and banks unable to lend ... I don't see how we get out of this mess," he said.

kbergen@tribune.com