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We've rescued our economy from catastrophe: Obama

Amid signs of recession nearing an end with job losses tapering off and unemployment falling for the first time in more than a year, US President Barack Obama took credit for rescuing the US economy from 'catastrophe.' "While we've rescued our economy from catastrophe, we've also begun to build a new foundation for growth," Obama said.

world Updated: Aug 08, 2009 12:31 IST

Amid signs of recession nearing an end with job losses tapering off and unemployment falling for the first time in more than a year, US President Barack Obama took credit for rescuing the US economy from "catastrophe."

"Today we're pointed in the right direction," he said shortly after the Labour Department on Friday reported a net loss of 247,000 jobs in July, the fewest job losses since August 2008 with the unemployment rate surprisingly inching down to 9.4 per cent.

"We're losing jobs at less than half the rate we were when I took office.We've pulled the financial system back from the brink," he said. "While we've rescued our economy from catastrophe, we've also begun to build a new foundation for growth."

The Labour Department report also revised job loss in June lower-to 443,000 job losses from 467,000.

The unemployment rate fell to 9.4 per cent from 9.5 per cent in June, the first decline in that closely watched reading since April of 2008. Economists cited by CNNMoney.com expected unemployment to rise to 9.6 per cent.

The unemployment rate fell even as employers continued to cut jobs because the Labour Department estimated there were 237,000 fewer people it counted as unemployed.

There was also plenty of bad news as the number of people unemployed for more than six months continued to rise, reaching nearly 5 million people, a record high.

The Labour Department also said that one reason for the declining number of job losses was because cuts had been so deep leading up to July that there were fewer workers to lay off during the seasonal shutdown that happens in some factories, such as those in the auto industry.

Since the start of 2008, 6.7 million jobs have been lost in the US. Several economists said that while the report confirms other economic readings suggesting that the recession may be ending, it's too soon to predict a sharp gain in jobs in the near term.

"The dawn of an economic recovery is here," said Sung Won Sohn, a professor of economics at Cal State University Channel Islands, as cited by CNNMoney.com.

"The economy is in the process of bottoming, but the job market will lag behind. Businesses, which engaged in preemptive layoffs earlier, are not about to start hiring people."

But Robert Brusca of FAO Economics said he believes there is more strength in the job market than many people are willing to acknowledge. He said that the government may even report an overall payroll gain for August next month.

"There is nothing about these numbers that suggest it's a fluke," he said.