DIANE SAWYER (ABC NEWS)(OC): And up next, the economy, and another strong sign that the US economy may be turning around.
DIANE SAWYER (ABC NEWS)(VO): The number of people applying for unemployment benefits dropped to its lowest level, 366,000, since before the recession.
DIANE SAWYER (ABC NEWS)(OC): And ABC's Jim Avila found a lot of people saying mark this date, the comeback is for real.
JIM AVILA (ABC NEWS)(VO): The smiling face of economic turnaround.
PETER BARNES (WAITER): I feel very happy that I can come into work, do a good job and make money and provide for my family.
JIM AVILA (ABC NEWS)(VO): Peter Barnes, out of work for five months, has a new job at a startup small business in Evanston, Illinois, part of a nationwide hiring boom with 1.6 million new jobs created in the past year and fueled by entrepreneurs like Peter's new boss, Mitch Dulin.
MITCH DULIN (OWNER OF CENTER STREET CAFE): I feel confident that 2012 is gonna be a growth year.
DIANE SWONK (MESIROW FINANCIAL): The real action is in new business formation, and that's the backbone of job generation in the United States is what we call new business birth.
JIM AVILA (ABC NEWS)(VO): A spike in hiring creating a long list of positive recovery signs.
JIM AVILA (ABC NEWS)(VO): Holiday spending expected to be up nearly 4%.
JIM AVILA (ABC NEWS)(VO): Consumer confidence up 15 points.
JIM AVILA (ABC NEWS)(VO): So are car sales, up 14%.
JIM AVILA (ABC NEWS)(VO): And even new home sales, up 10% in the past month.
JIM AVILA (ABC NEWS)(VO): With mortgage rates at 3.5%, lowest in history.
JIM AVILA (ABC NEWS)(VO): Jobless claims down to a level not seen since before the financial crisis, hinting at another dip in unemployment.
MARK ZANDI (MOODY'S ANALYTICS): That'll improve their confidence levels. That means they'll go out and continue to spend and that will prompt businesses to hire even more.
JIM AVILA (ABC NEWS)(VO): A plus-side cycle jacked by shoppers out there spending today. Andrea Buzinkai's list is 40% longer this year.
ANDREA BUZINKAI (SHOPPER): It has a lot to do with the economy getting a little better this year than it was last.
JIM AVILA (ABC NEWS)(VO): And there's Marie Rodriguez, whose Christmas purchases sound like a retailers dream.
MARIE RODRIGUEZ (SHOPPER): TVs, VCRs, blu-ray, DVDs.
JIM AVILA (ABC NEWS)(OC): And the shoppers are out. You can see them all right now behind me. They're filling the stores. But there are some things to worry about. Icebergs, the economists call them. The biggest one? Gridlock in Washington. Then there's also the problems with the Euro in Europe. Either of those could in fact derail or stop the momentum that is definitely building now. Diane?