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US President Barack Obama gives his first speech to the joint houses of Congress as US Vice-President Joe Biden and House Speaker, Democrat Nancy Pelosi look on - Source: Reuters -
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President Barack Obama says he sees little hope of near-term improvement in the US economy after a staggering drop in gross domestic product in the final three months of last year.
"The economy's performance in the last quarter of 2008 was the worst in over 25 years. And frankly the first quarter of this year holds out little promise for better returns," Obama said in a speech at the Department of Transportation.
He said one of the main challenges facing his government was to unlock frozen credit markets and that the launch on Tuesday of a new lending facility by the Federal Reserve and the Treasury was key to that effort.
The consumer lending initiative will generate up to $US1 trillion in lending, officials said.
"This will help unlock our credit markets, which is absolutely
essential for economic recovery," Obama said, speaking two weeks
after signing a $US787 billion stimulus package aimed at jolting
the world's largest economy out of recession.
Senior White House adviser Christina Romer said the stimulus
package could pack a big punch because households and businesses
struggling to get credit were more likely to spend the money.
"I think it is possible that fiscal policy will have even more oomph in this situation," Romer, who heads the Council of Economic Advisers, told an economics conference.
Obama, a Democrat who took over as president six weeks ago from Republican George Bush, is hosting British Prime Minister Gordon Brown for talks that will focus on the ailing US financial sector and the global economic crisis.
Many economists have expressed concern the current US stimulus package would have only a modest impact on 2009 growth and that consumers would be inclined to pocket tax cuts as they try to rebuild savings wiped out by falling real estate and stock markets.
The US economy suffered its deepest contraction since early 1982 in the fourth quarter of last year, plummeting at a 6.2% annual rate as consumers pulled back sharply on their spending.
The grim data has contributed to the huge sell-off in the US stock market, which hit a 12-year low this week.
