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Obama Voices Both Caution, Optimism on Economy

April 14, 2009 at 6:00 PM EST
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Retail sales in March showed the economy has not yet recovered on the same day President Obama delivered a speech cautioning Americans to be patient as the government tries to turn things around. Kwame Holman provides a report.
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GWEN IFILL: Our lead story: The latest look at the economy was disappointing today, with retail sales weaker than expected. The report came as President Obama talked of signs of progress, but cautioned it will be slow.

NewsHour correspondent Kwame Holman has our report.

KWAME HOLMAN: The numbers from the nation’s retailers were a setback to hopes for an early economic recovery. For March, the Commerce Department reported retail sales were down 1.1 percent.

Consumers spent less on a whole range of goods, from electronics and appliances, down nearly 6 percent, to cars, down more than 2 percent, to clothing, which fell 1.8 percent.

The sales figures were watched closely by economists, because consumer spending accounts for 70 percent of the U.S. economy.

President Obama took note of that fact in what aides billed as a major economic address at Washington’s Georgetown University. He cited consumer spending woes in defending his stimulus program.

U.S. PRESIDENT BARACK OBAMA: If everybody, if every family in America, if every business in America cuts back all at once, then no one is spending any money, which means there are no customers, which means there are more layoffs, which means that the economy gets even worse. That’s why the government has to step in and temporarily boost spending in order to stimulate demand. That’s exactly what we’re doing right now.

KWAME HOLMAN: More broadly, Mr. Obama expressed some optimism about the overall economic outlook, but his remarks were tempered.

BARACK OBAMA: There’s no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we’re 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.

Bernanke echoes Obama's themes

KWAME HOLMAN: A short time later, Federal Reserve Chairman Ben Bernanke took the same theme at Morehouse College in Atlanta.

BEN BERNANKE, Federal Reserve chairman: Recently, we have seen tentative signs that the sharp decline in economic activity may be slowing. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and our 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.

KWAME HOLMAN: The president also touched on the need for financial stability in his speech, but he defended his decision not to nationalize banks outright.

BARACK OBAMA: The reason we have not taken this step has nothing to do with any ideological or political judgment we've made about government involvement in banks. It's certainly not because of any concern we have for the management and shareholders, whose actions helped to cause this mess.

Rather, it's because we believe that pre-emptive government takeovers are likely to end up costing taxpayers even more in the end and because it's more likely to undermine than create confidence.

KWAME HOLMAN: Goldman Sachs, which took financial rescue funds, reported strong first quarter earnings late Monday. Today, it sold $5 billion worth of stock in order to pay the government back.