Obama says second fiscal stimulus bill not yet needed

Tuesday, June 23, 2009 |

U.S. President Barack Obama said a second stimulus package isn’t needed yet, though he expects the U.S. unemployment rate will exceed 10 percent this year.

“I think it’s important to see how the economy evolves and how effective the first stimulus is,” Obama said at a White House news conference.

He said it is “pretty clear” that unemployment will continue rising before the recovery takes hold and said it isn’t surprising that initial forecasts from his administration missed the mark.

The economy has lost about 6 million jobs since the recession began in December 2007. The jobless rate jumped to 9.4 percent in May, the highest in more than 25 years.

Obama signed the $787 billion stimulus bill in February, and his chief economic advisers had forecast it would help hold unemployment below 8 percent. It included tax cuts and spending on infrastructure projects that the president pledged would save or create 3.5 million jobs.

“I don’t feel satisfied with the progress that we’ve made,” Obama said. He cited the need to speed up distribution of stimulus funds and do more work with a program to modify existing mortgages, which hasn’t “been keeping pace with all the foreclosures that are taking place.”

Foreclosure filings in the U.S. surpassed 300,000 for a third straight month in May and may reach a record 1.8 million by the first half of the year, RealtyTrac Inc. said June 11.

The median price of an existing home has fallen 26 percent from the peak reached in July 2006 as sales slumped and financial institutions auctioned off foreclosed properties. While the losses have devastated some families, others were able to buy a house for the first time because of the drop in values.

Obama defended his initial stimulus projections, saying the economy worsened once the legislation was enacted only weeks into his presidency.

“Nobody understood what the depths of this recession were going to look like,” Obama said. “It was only significantly later that we suddenly get a report that the economy had tanked.”

“It’s not surprising, then, that we missed the mark in terms of our estimates of where unemployment would go,” he said.

For the second time in a month, Obama voiced unease over the results of a $787 billion economic stimulus that he pressed Congress to pass as one of his first acts as president.

New polls indicate that the still-popular president faces some erosion of support over his economic policies. Other polls show Americans are more upbeat than last year but still wary of spending, a sign of uncertainty and a prescription for a slow recovery.

Obama's lowered expectations for employment served to prepare the public for more economic bad news even as the economy shows signs that the worst of the recession is over. Unemployment typically continues to rise even as an economy begins to recover, a political predicament for Obama as he pushes a domestic policy centered on health care reform.

Earlier this month, Obama promised to speed up the outflow of money and create or save 600,000 jobs by the end of the summer. But spending of the stimulus money had been expected to rise in the summer anyway and the 600,000 jobs had been a target for a month.

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