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IMF’s Lagarde: Global Economy Sees ‘Dark Clouds on the Horizon’

April 20, 2012 at 12:00 AM EDT
As questions grow about the stability of the worldwide economy now that there are more troubling signs in Europe and mixed reports in the United States, the International Monetary Fund announced the 20 leading industrial and emerging nations have pledged $430 billion to help deal with Europe's problems. Judy Woodruff reports.
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JUDY WOODRUFF: Questions are growing about the stability of the worldwide economy now that there are more troubling signs in Europe and mixed reports here at home.

On Wall Street, at least, the mood brightened a bit today. The Dow Jones industrial average gained 65 points to close at 13,029, although the Nasdaq fell seven points to close at 3,000. Traders pinned their hopes to strong earnings reports from General Electric, McDonald’s and Microsoft.

But other, more negative news has raised questions about whether economic growth is slowing again. The unemployment report for March showed the smallest number of new jobs created since November. And this week came data showing housing starts have dropped and factory activity has lessened.

At the same time, there are questions about the worldwide recovery.

Christine Lagarde, the head of the International Monetary Fund, or IMF, offered this assessment yesterday in Washington.

CHRISTINE LAGARDE, managing director, International Monetary Fund: We are seeing a light recovery blowing in a spring wind, but we’re also seeing some very dark clouds on the horizon.

JUDY WOODRUFF: Lagarde said those “dark clouds” include high unemployment, slow growth, and higher gas prices.

A day earlier, U.S. Treasury Secretary Timothy Geithner sounded somewhat more optimistic.

SECRETARY OF TREASURY TIMOTHY GEITHNER: I think that if you look ahead, the world is I think still at the early stage of what’s going to be a very long period of pretty substantial rates of growth in the emerging world, the most populous parts of the world.

JUDY WOODRUFF: But Europe remains a particular source of concern. The debt crisis weighing on Spain, Italy and Greece still has the capacity to set back the U.S. recovery.

Today, ahead of weekend meetings in Washington, the IMF announced the 20 leading industrial and emerging nations have pledged $430 billion to help deal with Europe’s problems.

Meanwhile, nagging questions about where the U.S. economy is headed are clearly affecting the 2012 presidential race. New polls this week indicate the contest has tightened, with economic worries giving Republican Mitt Romney an opening against President Obama.

MITT ROMNEY (R): He points out he did not cause the recession, but he did make it worse. And he says, well, look, things are getting better. And I sure hope they’re getting better. Gosh, I hope they’re getting better. But that’s not because of him. That’s in spite of him.

JUDY WOODRUFF: For his part, the president has charged that Republican calls for deregulation and tax cuts will help the wealthy and no one else.

PRESIDENT BARACK OBAMA: In this country, prosperity does not trickle down. And that’s why I’m always confused when we keep having the same argument with folks who don’t seem to remember how America was built.

JUDY WOODRUFF: Both politicians and the public will be watching critical indicators that may foretell not only where the economy is headed, but who will occupy the White House next year.