The American economy will suffer through the rest of the year, but is starting to show initial signs of recovery, US President Barack Obama said in a speech at Georgetown University.
President Obama, who used the opportunity to praise his Administration’s economic recovery plan and deflect criticism of his first budget, said economic improvement is on the horizon.
‘There is no doubt that times are still tough. By no means are we out of the woods just yet,” he said.
”But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past,” he said.
Obama highlighted bright spots, such as:
Obama could have also referred to recent gains in the sharemarket, where optimism about the state of the banking and technology sectors has helped the S&P500 index climb 24% from its March low-point.
Obama’s speech, which is the Administration’s first detailed examination of the 16-month long downturn, released no new policies but dismissed critics who suggest the White House is spending with “reckless abandon”.
Congress has recently passed Obama’s budget, coming in at a record $US3.5 trillion.
“I know there is criticism out there that my Administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children’s future,” Obama said.
“History has shown repeatedly that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, years of low job creation, years of low investment, all of which cost these nations far more than a course of bold, upfront action.”
Regardless of the Administration’s budget and economic recovery packages, sharemarkets have been slow to respond. New data that revealed a 1.1% drop in retail sales last month have once again sent the sharemarket into decline.
But despite losses in the sharemarket and the nation’s 25-year-high unemployment rate of 8.5%, Obama used his speech to praise the $US787 billion economic recovery package designed to get credit flowing and stabilise property markets.
“To be sure, we will not have a sustainable recovery without a stabilisation of our financial system and credit markets. We are making progress on that front as well, and the Federal Reserve is committed to working to restore financial stability as a necessary step toward full economic recovery,” he said.
Obama has signalled that he wants to introduce regulation reform for the financial system by the end of the year. “It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations,” he said.
The President’s comments were echoed by Federal Reserve Chairman Ben Bernanke in a speech to Morehouse College in Atlanta.
”Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding, and consumer spending, including sales of new motor vehicles,” he said.
”A levelling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilisation of our financial system and credit markets. We are making progress on that front as well,” he said.
Related articles:
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
