Obama sees economic ‘glimmers of hope’

Obama sees economic ‘glimmers of hope’
By Tom Braithwaite in Washington
Copyright The Financial Times Limited 2009
Published: April 10 2009 22:54 | Last updated: April 10 2009 22:54
http://www.ft.com/cms/s/0/1510d9c8-2619-11de-be57-00144feabdc0.html


President Barack Obama sees “glimmers of hope” in the US economy, citing a pick-up in lending to small businesses and lower mortgage rates as signs that the country is weathering the financial crisis.

Accused by some conservative commentators of talking down the economy since his election, Mr Obama on Friday adopted cautious optimism after a meeting with Ben Bernanke, Federal Reserve chairman, and Sheila Bair, chairman of the Federal Deposit Insurance Corporation.

He said lower mortage interest rates were “contributing to stabilisation of the housing market” and a government programme to support loans to small businesses had seen a 20 per cent increase in loans last month.

The more positive tone follows comments on Thursday from Lawrence Summers, chief economic adviser to the White House, in which he predicted the “sense of freefall” in the economy would end in the next few months.

Mr Summers cautioned that an improvement in unemployment would lag a broader economic recovery. The unemployment rose to 8.5 per cent last month, a new 25-year high.

On Friday, Mr Obama also tempered his more upbeat message, saying “the economy is still under severe stress…we’re still seeing a lot of job losses, a lot of hardship, people finding themselves in very difficult situations either because they’ve lost their home, they’ve seen their savings deteriorate, and they’re still at risk of losing their jobs”.

While the possibility remains that Mr Obama may ask Congress for more funds to follow his $787bn fiscal stimulus, he has a political calculation in not sounding too upbeat.

A stock market rally has helped bolster confidence, with the Dow Jones Industrial Average rising 23 per cent in the last month.