US PRESIDENT Barack Obama said yesterday the recession-hit US economy was showing “glimmers of hope” despite remaining under strain.
Mr Obama promised further steps to tackle the financial crisis.
“We’ve still got a lot of work to do,” he said after meeting his economic teams and Federal Reserve chairman Ben Bernanke, but added: “We’re starting to see progress.”
The president made his comments as new research showed the world’s major economies were continuing to head for a deep slowdown but that the pace of decline had eased in some countries.
The Organisation for Economic Co-operation and Development (OECD) said its composite leading indicators index, which is designed to provide early signals of turning points in business cycles, continued to point to a deep slowdown for all of the seven major global economies, including the UK.
The international think-tank said some “tentative signs of improvement” in the rate of deterioration were appearing in some countries, including Italy and France, though this could not be overstated.
“The picture for all countries remains weak, with the outlook in the United States, Canada, Japan and the major non-OECD member economies in particular, further deteriorating since last month,” said the OECD in a statement.
Mr Obama spoke a day after the release of encouraging trade and jobless figures pushed stocks higher, and White House economic adviser Lawrence Summers predicted the economy would emerge from a sense of “freefall” by the middle of the year.
Less than three months into his presidency, Mr Obama stopped short of declaring that the recession was bottoming out, but he offered a more upbeat tone than he has recently on the state of the US economy, which is locked in its worst crisis in decades.
“What we’re starting to see is glimmers of hope across the economy. Over the next several weeks you’ll be seeing additional actions by the administration.”
He did not mention the “stress tests” being conducted at 19 major US banks, the results of which are due this month and are anxiously awaited by the markets.
Attempting to assess the capital needs of the banks, the government is testing how they would fare under more adverse economic conditions than are expected.
Mindful of market sensitivity, the Treasury Department has asked banks not to talk about the stress tests as part of their first-quarter earnings results.
Asked whether banks were being told to be silent on the results of the tests, Obama adviser Austan Goolsbee said: “You ought to wait until the proper announcement time of all the bank examinations together, rather than have individual banks come running forward revealing their individual information alone.”
Mr Obama said he and his advisers discussed a programme to use public-private sector investment funds to help banks clear their books of toxic assets.
Meanwhile, Japan has unveiled a record 15.4 trillion yen (€116 billion) stimulus package, which economists believe may give the country a short-term economic boost but will leave it saddled with debts that will smother future growth. The plan, which was unveiled by Prime Minister Taro Aso, is aimed at creating jobs in an economy heading for its worst recession since 1945.
Equal to 3 per cent of gross domestic product (GDP), the measures will add to Japan’s debt that the OECD already forecasts will rise to 197 per cent of the country’s economic output next year. – (Bloomberg, PA)
