BL: Bush Says Americans Face a `Tough Economic Period' (Update1)
By Holly Rosenkrantz
May 3 (Bloomberg) -- President George W. Bush said Americans are ``facing a tough economic period'' after reports this week showed the economy lost jobs for a fourth straight month and economic growth was close to a standstill.
``My administration has been clear and candid on the state of the economy,'' Bush said today in his weekly radio address. ``We saw the economic slowdown coming, we were up front about these concerns with the American people, and we've been taking decisive action.''
Payrolls shrank by 20,000 workers last month, following a revised 81,000 drop in March, the Labor Department said yesterday. The same day, the Federal Reserve, seeking to prevent a deeper slowdown, announced fresh measures to coax banks into lending.
``I'm confident we can weather this rough period,'' Bush said. Tax rebates of $117 billion will have a ``positive effect on the economy in this quarter, and an even greater impact in the next.''
The rebates to 130 million households are part of a stimulus package approved earlier this year that also includes investment incentives for companies. Bush today urged Congress to boost the economy by passing energy, mortgage-overhaul and tax-reduction bills.
The loss of jobs in April was smaller than forecast by economists, suggesting that the economic slowdown may be milder than the 2001 recession. The jobless rate unexpectedly fell to 5 percent from 5.1 percent, reflecting a jump in part-time workers that may signal companies are still scaling back.
Fed Moves
The Fed yesterday boosted its biweekly sales of cash to banks, known as the Term Auction Facility, by half to $75 billion and expanded the collateral it takes from bond dealers through loans of Treasury securities.
Borrowing costs for banks have risen as much as 0.38 percentage point in the past six weeks, an increase that blunted the impact of the cash injections that began in December. The strains threatened to further impair mortgage markets, worsening an economy where growth has already stalled.
The decision came two days after the Fed's interest-rate setting Open Market Committee lowered its benchmark rate for a seventh time since September, while signaling it's ready to hold off on further cuts. The rate was cut by a quarter point to 2 percent.
The government this week reported the economy expanded at a 0.6 percent annual pace for the second straight quarter. A buildup of business inventories prevented the economy from shrinking.
To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net
Last Updated: May 3, 2008 12:07 EDT
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