US President Barack Obama said on Thursday he was confident the US economy would recover, despite new data showing unemployment at a 26-year-high of 9.5 percent, which dampened hopes of a quick rebound.
Obama said the latest jobless figures, which showed the economy shedding 467,000 jobs last month, were “sobering” but insisted there were signs that the recession was slowing after the worst slump since the 1930s Great Depression.
“As I’ve said from the moment I walked into the door of this White House, it took years for us to get into this mess and will take us more than a few months to turn this around,” Obama said.
The president spoke after meeting a group of CEOs of what he described as the “most innovative energy companies in America” to talk about a sector he says is vital to hauling the country out of its deepest recession in decades.
“I’m absolutely confident that we can, at this period of difficulty, prove, once again, what this nation can achieve when challenged,” Obama said.
“I’m confident that we’re not only going to recover from this recession in the short term, but we’re going to prosper in the long term,” he said.
The Labor Department report, seen as one of the best indicators of economic momentum, reversed the improvement seen last month when job losses fell to a revised 322,000.
Since the recession began in December 2007, the world’s biggest economy has lost 6.5 million jobs and the jobless rate has risen 4.6 percentage points.
Obama said last month that unemployment may rise above 10 percent before the economy stabilizes.
Taking office in the grip of economic blight at the end of January, Obama quickly passed a US$787 billion economic stimulus bill and has presided over sweeping banking, mortgage and regulatory reform.
White House spokesman Robert Gibbs on Thursday denied that the figures showed the stimulus plan was not working.
“There is a sense that the beginnings of stabilization are taking hold,” he said, adding that “there’s obviously evidence that the recovery plan is working.”
Senior White House officials have argued that the jobless picture would be even worse were it not for the job-creating impact of the stimulus plan.
With the economy still bleeding jobs, some analysts fear a new downward spiral fed by falling incomes that cut into consumer spending, the lifeblood of economic activity.
Meny Grauman, an economist at CIBC World Markets, said that some analysts had gotten ahead of themselves in anticipating an economic recovery.
The payrolls report last month “shows the recession lives on in the United States,” he said.
“It’s a question of the pace of decline and not recovery. The economy continues to contract at a slower pace than at the beginning of this year, but it’s still a steep ride,” he said.
Many analysts expect the third quarter that began on July 1 to show flat or improving economic activity as a recovery takes hold, but the latest labor report is raising doubts.
“I have always argued that one month a trend does not make and that is the case with this data. But the employment reductions have to slow soon if the economy is to start to rebound,” Joel Naroff at Naroff Economic Advisers said.