President Barack Obama, updating the American people on Tuesday, believes there are signs of recovery in the US recession-hit economy but "by no means are we out of the woods just yet." Shortly before he was to deliver his latest economic speech at Georgetown University, US stocks fell after an unexpected drop in retail sales dampened recent optimism.
Although bank stocks were boosted by Goldman Sachs posting higher-than-expected first quarter profits. "I want to update you on the progress we've made, and be honest about the pitfalls that may lie ahead," said Obama's advance text of what the White House billed as a major speech.
"But from where we stand, for the very first time, we are beginning to see glimmers of hope," Obama said, repeating a phrase he has used often in recent days. Obama outlined the many steps his administration has taken since he was sworn in on January 20, inheriting the worst economic crisis in decades from his predecessor George W. Bush.
Obama said his $787 billion economic recovery package, steps to recapitalise banks, unfreeze credit markets, stabilise the housing market and shore up the ailing US auto industry were all necessary pieces of the "recovery puzzle." "And taken together, these actions are starting to generate signs of economic progress," he said.
Earlier on Tuesday, White House economic adviser Christina Romer said the US economy was "still sick" and she forecast continued job losses and a falling gross domestic product for several more months. The US economy lost 663,000 jobs last month, pushing the unemployment rate to a 25-year high of 8.5 percent. 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.
There was more gloomy economic news on Tuesday, with new data showing that US retail sales fell 1.1 percent after two months of increases. Producer prices also fell unexpectedly. The data tamped down cautious optimism among some investors, fuelled by positive housing and consumer spending figures, that the 16-month-old economic downturn was close to its bottom.
Obama said 2009 would continue to be a difficult year, warning that Americans would see more job losses, more house home foreclosures "and more pain before it ends." "There is no doubt that times are still tough. By no means are we out of the woods yet," he said.
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