Obama touts new economic model for recovery
President Barack Obama tried to send a more upbeat message on the future of the American economy on Friday, saying his administration is working to create a model for solid economic growth once the bitter recession ends.business Updated: Mar 14, 2009 14:23 IST
President Barack Obama tried to send a more upbeat message on the future of the American economy on Friday, saying his administration is working to create a model for solid economic growth once the bitter recession ends.
Obama and other administration officials were criticized earlier this year for painting too dark a picture in an effort to win congressional passage of a $787 billion stimulus package he says will turn around the collapsing economy.
But more recently, the president and others on his team have tempered their comments in hopes of building confidence, despite little solid evidence to suggest an end was in sight to a recession that has already cost the US over four million jobs, driven home values down and sent foreclosures soaring.
Obama acknowledged on Friday that "we've got to get through this difficult period," but called on Americans to keep "focused on all the fundamentally sound aspects of our economy" and pave the way for a stable economic future.
"It is very important even as we're focused on the financial system and the credit markets, that we are laying the foundation for what I'm calling a post-bubble economic growth model," Obama said. There are "modestly encouraging signs," said Lawrence Summers, Obama's top economic adviser, citing indications that consumer spending had stabilized after taking a dive over the holiday season. The White House attempts to be positive matched a fourth day in a row of stock market gains. The Dow Jones industrials gained 53.92 points to cap Wall Street's best week since last November. But, there were also fresh signs of financial stress. The Commerce Department reported on Friday that the US trade deficit plunged in January to the lowest level in six years as the economic downturn cut America's demand for imported goods. And China's premier, Wen Jiabao, expressed concern over the US economy and the value of his own nation's vast holdings in Treasury bonds. China is Washington's biggest foreign creditor, holding an estimated $1 trillion in US government debt.
"We have lent a huge amount of money to the US, so of course, we are concerned about the safety of our assets," Wen told reporters in Beijing.
But in Washington, Summers said it was time for America to move past an "excess of fear" that has made things worse. Summers, who was treasury secretary under President Bill Clinton and now is director of Obama's National Economic Council, said it was too soon to gauge the broad impact of the administration's recovery program or to predict when the recession might end. But he suggested glimmers of hope.
Speaking at a Brookings Institution forum, he was asked by a member of the audience what the nation's business community could do to help speed the recovery.
"What we need today is more optimism and more confidence," Summers said.
As for the Chinese premier's comments on US Treasury bonds, White House spokesman Robert Gibbs said, "There's no safer investment in the world than in the United States." He urged lawmakers to adopt the president's budget, saying it would lead to fiscal discipline in the long term.
Obama spoke with reporters after meeting with former Federal Reserve Chairman Paul Volcker, chairman of his Economic Recovery Advisory Board.
Meanwhile, the government said the US trade imbalance dropped to $36 billion in January, the lowest level since October 2002. However, the politically sensitive shortfall with China bucked the trend, rising by 3.5 per cent to $20.6 billion.
US manufacturing companies, battered by what they view as unfair competition from China, said that the continued high deficit with that nation pointed to a need for the Obama administration to take a tougher line on trade rules with the Chinese. Heads of state from both the United States and China will be among leaders of the Group of 20 advanced and developing nations meeting in London early next month to try to chart a common approach to taming the global recession.
Finance ministers from those 20 nations, including Treasury Secretary Timothy Geithner, were meeting near London this weekend to discuss the April agenda. Geithner was seeking a commitment from the other countries to increase stimulus spending. But many in Europe are calling for better financial regulation, not spending.