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Obama team touts 'post-bubble' model
President: Days of maxed-out credit over
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Published: March 14, 2009
WASHINGTON - Turning more upbeat, President Obama said yesterday that his administration is working to create a "post-bubble" model for solid economic growth once the recession ends. He said that means the days of overheated housing markets and "people maxing out on their credit cards" are over.
But first, Obama said, "We've got to get through this difficult period."
There are "modestly encouraging signs" on that score, said Lawrence Summers, Obama's top economic adviser, referring to indications that consumer spending had stabilized after taking a dive over the holiday season.
The White House's attempts to be positive matched a fourth day in a row of stock-market gains. The Dow Jones industrials gained 53.92 points to close at 7,223.98, capping Wall Street's best week since November.
Administration officials were criticized earlier this year for painting too dark a picture of the economy in an effort to win congressional passage of Obama's $787 billion stimulus package. But more recently, Obama and others on his team have tempered their comments, apparently in hopes of building confidence, including Obama's suggestion last week that it was a good time for those with a long-term perspective to buy stocks.
Despite the new enthusiasm at the White House and on Wall Street, there was little solid evidence to suggest that an end is in sight to the severe recession that has already cost the U.S. more than 4 million jobs, driven home values down and sent foreclosures soaring.
Also, there were fresh signs of financial stress. The Commerce Department reported yesterday that the U.S. trade deficit fell in January to the lowest level in six years as the economic downturn cut America's demand for imported goods.
In Beijing, China's premier, Wen Jiabao, expressed concern over the U.S. economy and the value of his own nation's vast holdings in Treasury bonds. China is Washington's biggest foreign creditor, holding an estimated $1 trillion in U.S. government debt.
"We have lent a huge amount of money to the U.S., so of course, we are concerned about the safety of our assets," Wen told reporters.
But in Washington, Summers said it is time for America to move past an "excess of fear" that has made things worse.
Summers, who was Treasury secretary under President Clinton and now is the director of Obama's National Economic Council, said it was too soon to gauge the broad effect of the administration's recovery program or to predict when the recession might end. But he suggested that there are glimmers of hope.
Speaking at a Brookings Institution forum, he was asked by someone in the audience what the nation's business community could do to help speed the recovery.
"What we need today is more optimism and more confidence," Summers said. He called it a "very good moment" to make investments in new construction and other projects. "There are a very large number of things that are on sale today."
Private economists agree that it is too soon to declare recovery is on the way.
"As long as we are losing over 600,000 jobs per month, consumers are not going to be able to sustain consumer spending," said Mark Zandi, the chief economist at Moody's Economy.com.
"It is too early to conclude that the bottom is at hand," he said after Thursday's report on retail sales and consumer spending.
The White House has been on a weeklong campaign to promote Obama's economic-recovery and financial-stability plans while giving a more upbeat assessment of the economy's ability to rebound. Summers had been working on his speech for five days.
Obama economic adviser Christina Romer delivered a speech with the same themes earlier in the week, and Obama on Thursday offered business leaders his view that the crisis is "not as bad as we think."
Yesterday, he called on Americans to keep "focused on all the fundamentally sound aspects of our economy." The phrase had a familiar ring. During the heat of the presidential campaign last September, Obama ridiculed rival John McCain when he said, "The fundamentals of our economy are strong."
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