April 10 (Bloomberg) -- President Barack Obama said the U.S. economy is “starting to see progress” toward recovery even as it is “still under severe stress.”
“What we’re starting to see is glimmers of hope,” the president told reporters at the White House after getting an update on the economy from Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Timothy Geithner, and Sheila Bair, chairwoman of the Federal Deposit Insurance Corp.
While Obama cited a 20 percent increase in government- backed loans to small businesses “over the last month alone,” he added that “right now we’re still seeing a lot of job losses, a lot of hardship.”
The talks centered on stimulating the economy, stabilizing banks, reducing strain in the credit markets, the rising jobless rate, mortgage refinancing and the health assessment of banks, including “stress tests” being conducted by the Fed.
“We have always been very cautious about prognosticating, and that’s not going to change,” Obama said. “The economy’s still under severe stress, and obviously during these holidays we have to keep in mind that whatever we do ultimately has to translate into economic growth, and jobs, and rising incomes for the American people.”
Helping Homeowners
Obama told reporters he and his experts discussed stabilization in the financial system and efforts to keep people in their homes as a result of government programs to modify loans, leading to a pickup in refinancing.
The average rate on a U.S. 30-year fixed mortgage dropped to 4.73 percent in the week ended April 3, the lowest since 1971. Fed policymakers last month kept the benchmark lending rate in a range of zero to 0.25 percent.
Obama didn’t mention the status of the Fed’s tests being conducted to see how the 19 largest U.S. banks would hold up if the recession worsens. Results may be released later this month.
“We’ve still got a lot of work to do,” Obama said. He didn’t take reporters’ questions.
There are signs of economic improvement. Orders placed with factories rose 1.8 percent in February, the first gain since July. Purchases of existing homes rose 5.1 percent to an annual rate of 4.72 million in February amid lower prices.
To be sure, the recession that began in December 2007 lingers. The unemployment rate rose to 8.5 percent in March, the highest level since 1983, and employers have cut payrolls by 5.1 million workers since the start of the downturn, the worst performance in the postwar era.
The economy probably shrank at a 5 percent annual rate in the first quarter, according to the median estimate in a Bloomberg News survey earlier this month.
Top Advisers
Also attending today’s meeting were Mary Shapiro, chairwoman of the Securities and Exchange Commission; John Dugan, Comptroller of the Currency, an arm of the Treasury Department that regulates national banks; and Obama’s top economic advisers, Lawrence Summers, director of the National Economic Council, and Christina Romer, head of the White House Council of Economic Advisers.
Summers yesterday expressed confidence that the U.S. recession is nearing an end.
“We can be reasonably confident that is going to end within the next few months and you’ll no longer have that sense of free fall,” Summers told the Economic Club of Washington.
To contact the reporter on this story: Roger Runningen in Washington at rrunningen@bloomberg.net Last Updated: April 10, 2009 13:00 EDT
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