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Is the recession over in the US?
By TOM RAUM Associated Press writer
Sunday, November 01, 2009
Tugged in different political directions, the White House is seeking credit for good economic news and trying to escape blame for the bad stuff.
US President Barack Obama greeted as "obviously welcome news" a government report showing the economy grew 3.5 per cent from July through September after four quarters of declines. That's unofficial confirmation that the long, harsh recession has ended.
But he had to serve it up with a dose of political reality. Even though the downturn that began in December 2007 may be technically over, a high level of joblessness will persist for months, perhaps years, to come.
A sign of the fragility of the recovery was quick to come. Stocks, which had surged on the upbeat growth report the day before, tumbled on Friday, more than wiping out the previous day's gains.
A government report that personal spending fell 0.5 per cent in September, the largest drop in nine months, added to the gloom. And a new Obama administration assertion that its stimulus programme had created or saved over 650,000 jobs failed to supply any traction.
It's important for a president to voice optimism after good economic numbers. It can help restore consumer confidence - crucial for any recovery, since consumer spending makes up two-thirds of the overall economy.
Yet Obama couldn't be too upbeat, knowing another government report is looming - one due next week - that could show unemployment topping 10 per cent in October after reaching a 26-year high of 9.8 per cent in September.
"We got a long way to go to fully restore our economy," Obama said.
The administration's own economists expect the unemployment rate to hover around 10 per cent through most of next year, a mid-term election year.
And even in good economic times, the president's party nearly always loses seats in Congress in mid-terms.
Jobs are sure to be a big issue in those contests.
"Presidents are like everybody else," said American University political scientist James Thurber. "They want to go to heaven without dying, they take credit for the good news and try to run away from the bad news and blame it on the previous administration."
"But we're getting so heavily into this administration that they can't do that anymore," Thurber said.
Obama can hardly be blamed for saying that "steps we've taken have made a difference" toward bringing about a fledgling recovery.
His administration's $787-billion stimulus spending package, including the Cash for Clunkers programme and tax breaks for first-time homebuyers, clearly contributed.
Without the stimulus package, the nation's economic output as measured by the gross domestic product "would have risen little, if at all, this past quarter", said Christina Romer, chairwoman of the White House Council of Economic Advisers.
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