Obama upbeat on economy, but warns "hard times" still ahead (Roundup)

Apr 14, 2009, 16:40 GMT

Washington - President Barack Obama on Tuesday said the government's efforts to revive the US economy were beginning to show signs of progress, but warned 2009 would remain a tough year as the US battles out of its worst recession in decades.

'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 wide-ranging economic speech at Georgetown University in Washington, picking up on the more upbeat tone he first sounded last week.

Obama cited indicators that banks were freeing up lending and homeowners were taking advantage of low mortgage rates to shore up their finances. He defended the government's massive spending efforts that critics argue are dangerously raising the federal deficit.

He touted the administration's unprecedented 787-billion-dollar economic stimulus package as well as a collection of trillion-dollar lending programmes by the Treasury and Federal Reserve to help revive the banking sector, which is going through the worst financial crisis since the Great Depression.

'Taken together, these actions are starting to generate signs of economic progress,' Obama said, but warned that 2009 would 'continue to be a difficult year.'

'The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends,' he said.

The US economy shrank 6.3 per cent in the last quarter of 2008 and economists are bracing for a similar figure at the start of this year. More than 5 million jobs have been lost since the start of the recession in December 2007, the fastest pace since the end of World War II.

But Federal Reserve Chairman Ben Bernanke offered a similarly optimistic assessment earlier Tuesday in a speech in Atlanta, Georgia, noting there were 'tentative signs that the sharp decline in economic activity may be slowing.'

US stock markets have rallied more than 20 per cent in the past month amid a series of better-than-expected indicators on the economy, while a number of top US banks this week reported surprising profits for the first quarter despite the continuing financial crisis.

US officials are hoping the economy may pull out of recession by the end of 2009.

But Obama also argued that the economic crisis made long-term goals like reforming financial regulation, health care, energy and education in the US all the more important to put the economy on a firm footing.