In what was billed by the White House as a major economic speech at Georgetown University, President Obama said this “will continue to be a difficult year for America’s economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should.
“All of this means that there is much more work to be done,” he continued. “And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.”
Listen to an excerpt of President Obama’s speech:
White House economic adviser Christina Romer said that the country will experience continued job cuts and a falling gross domestic product for several more months.
“We know the economy’s still sick. We know we’ve got several more months of job loss, for example. We know that the numbers on GDP are almost surely going to be very bad for this quarter and next,” Romer said on NBC’s “Today Show.”
Meanwhile, Federal Reserve Chairman Ben Bernanke was expected to say there have been “tentative signs” that the recession may be easing. But he also warned that any hope for a lasting recovery hinges on the government’s ability to stabilize shaky financial markets and get credit to flow more freely again.
Specifically, he pointed to improvements in recent data on home and auto sales, home building and consumer spending as flickering signs of encouragement.
“Recently we have seen tentative signs that the sharp decline in economic activity may be slowing,” Bernanke said in remarks prepared for students and faculty at Morehouse College in Atlanta.
“A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets,” he said.
But the Fed is “making progress on that front as well,” Bernanke said, and will keep working to ease financial and credit stresses so those markets operate normally.
The president said rebuilding the economy with five pillars will restore U.S. economic might: new regulations for Wall Street, investments in education, researching renewable energy, trimming federal debt and cutting health care costs for families and business.
“That is the new foundation we must build. That is our future,” he said, according to remarks as prepared for delivery at Georgetown University.
President Obama touted the economic efforts of his administration’s first three months in office — the $787 billion stimulus package, bank capitalization program, housing plan, strengthening of the non-bank credit market, a plan for Detroit’s automakers, and work at the G-20. He said those “have been necessary pieces of the recovery puzzle.”
“Taken together, these actions are starting to generate signs of economic progress,” President Obama said, in remarks as prepared for delivery.
But sagging retail sales figures released Tuesday delivered a setback to hopes that the economy’s steep slide could be bottoming out. Sales at U.S. retailers fell in March as mounting unemployment continues to depress consumer spending, snapping two months of increases, the Commerce Department said.
Total retail sales dropped 1.1 percent after rising a revised 0.3 percent in February. March sales were weighed down by declining purchases for big-ticket items like motor vehicles and electronic goods.
“This serves as a reminder that the recession is still here and that rising unemployment, declining income as well as a deep plunge by household net worth will adversely affect retail sales indefinitely,” John Lonski, chief economist at Moody’s Investors Service, told Reuters.
Another report from the Labor Department showed U.S. producer prices fell in March and also recorded their largest year-over-year decline since 1950 as subdued demand makes it hard for producers to raise prices.
The index for prices paid at the farm and factory gate fell 1.2 percent last month versus a 0.1 percent gain in February. Compared with the same period last year, producer prices were 3.5 percent lower, the largest decline since a 3.9 percent fall in 1950, the department said.
Last month, the U.S. economy lost 663,000 jobs, driving the unemployment rate to a 25-year high of 8.5 percent. Economists polled by Reuters expect the unemployment rate to rise to 9.8 percent a year from now.
The economy shrank at an annual rate of 6.3 percent in the last quarter of 2008, the steepest decline since the first quarter of 1982.
Economists polled by Reuters expect GDP to contract by 5.0 percent in the first quarter of 2009 and 2 percent in the second quarter before edging into positive growth toward the end of the year.