Washington - US President Barack Obama said Tuesday he saw "glimmers of hope" as America battles the deepest economic slump in generations but warned of painful choices and more deep job cuts to come.
"There is no doubt that times are still tough," Obama said in a sweeping survey of his attempts to piece together an economic rescue "puzzle" which also justified unpopular bailouts for the banking and finance industries.
"By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope," Obama said in a speech at Georgetown University.
Obama, three months into a presidency already dominated by the crisis, warned his efforts to restructure the once-mighty US auto industry and crippled insurance giant AIG would "involve difficult and sometimes unpopular choices."
And he forecast more job cuts and mortgage foreclosures before the economy turns around, in remarks balancing optimism for the future with a sober assessment of more rough times to come.
Obama said: "2009 will continue to be a difficult year for America's economy.
"The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends," he warned.
"The market will continue to rise and fall, credit is still not flowing nearly as easily as it should.
"The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices," Obama said, in an address styled as a direct and frank economic update to the American people.
"All of this means that there is much more work to be done and all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts."
The president also walked a fine line between condemning corporate excess and justifying the expenditure of public money to save the crippled finance industry.
"I promise you, nobody is more frustrated than me with AIG," he said, referring to the insurance giant which has received more than $180bn in government cash.
"We've had to provide support for AIG because the entire system, as fragile as it is could be profoundly endangered if AIG went into a liquidation bankruptcy."
Obama admitted that a lot of Americans think taxpayer cash would be better spent going directly to families and businesses.
But he added "the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth."
Obama spoke after Federal Reserve chief Ben Bernanke said Tuesday there were initial signs the US recession may be easing but warned of the need for financial stability for full recovery.
He noted "tentative signs that the sharp decline in economic activity may be slowing," citing data on home sales, homebuilding and consumer spending, including sales of new motor vehicles.
The president meanwhile cited the Bible and the parable at the end of the Sermon on the Mount to encapsulate his efforts to overhaul the US financial system, to head off future crises.
"We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock," Obama said, in the address sandwiched between a trip to Europe which ended last week and a Latin America visit starting Thursday.
"We must lay a new foundation for growth and prosperity - a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad."
Short attention span
Obama also rebuked the media for its fixation on instant results and Washington politicians who seek short-term gain in times of economic blight.
"There's been a tendency to score political points instead of rolling up sleeves to solve real problems - there is also an impatience that characterises this town - an attention span that has only grown shorter with the twenty-four news cycle, and insists on instant gratification in the form of instant results or higher poll numbers."
Despite the president's disdain for polls, the White House will likely welcome results of a new survey by CNN and Opinion Research, which showed 58% of Americans believe Obama has a clear plan to tackle the recession.
- AFP