Obama Says Recession Nears End as Data Improve While Polls Fall

By Nicholas Johnston and Edwin Chen

July 30 (Bloomberg) -- President Barack Obama sought to reconcile improving economic data and his own sagging poll ratings by telling Americans that many are still struggling even as an end to the recession may be near.

The president opened two events yesterday outside Washington designed to focus on health care with a defense of his economic policies, saying they stopped a “freefall.”

“We may be seeing the beginning of the end of the recession,” Obama told about 2,000 people at a high school gymnasium in Raleigh, North Carolina, a state where the unemployment rate is 11 percent. “But that’s little comfort if you’re one of the folks who have lost their job, and haven’t found another.”

The president’s remarks were designed to reassure the public that he understands the impact of the worst recession in five decades, which has pushed the national unemployment rate to 9.5 percent. It has also depressed Obama’s approval ratings and complicated his drive to overhaul the health-care system.

Forty-eight percent of registered voters say Obama’s policies have failed to end the recession or slow the pace of job losses while 45 percent agreed the president’s approach averted a worse crisis, according to a poll conducted July 22- 26 for National Public Radio.

The economy also may be a drag on Obama’s effort to push Congress to pass health-care legislation, his top domestic priority. The NPR poll found the economy and jobs are the top concern of Americans, cited by 39 percent of those polled. Health care trailed with 12 percent.

Economic Data

The administration can point to data suggesting the economy is poised to rebound. Housing starts unexpectedly rose in June as construction of single-family dwellings jumped by the most since 2004 and industrial production shrank in June at the slowest pace in eight months, according to government figures.

The Federal Reserve said yesterday that most of its 12 regional banks detected a slower pace of economic decline in June and July, and the benchmark Standard & Poor’s 500 Index has risen 15 percent since Obama’s inauguration.

Obama said he arrived in office facing “the worst economy of our lifetimes” and that the bank rescues begun under former President George W. Bush were necessary to avoid a collapse of the financial system. Propping up General Motors Corp. and Chrysler LLC was necessary to save thousands of jobs, he said.

And without naming Bush, he blamed his predecessor for the government financial shortfall, projected to rise to a record $1.84 trillion this year.

“They basically handed me a bill for $1.3 trillion,” Obama said in remarks to workers at a Kroger grocery store in Bristol, Virginia.

Health Care and Economy

As he has at other events pushing for an overhaul of the nation’s health-care system, Obama said medical care must be revamped to ensure future economic growth and lower medical costs to help reduce the federal debt.

At both of yesterday’s events, before his remarks on health care and questions from the audience, Obama turned to the economy. He cited a recent cover of Newsweek magazine that says “The Recession is Over.”

“Now, I imagine that you might’ve found the news a little startling. I know I did,” Obama said in North Carolina. “Here’s what’s true: We have stopped the freefall. The market’s up and the financial system is no longer on the verge of collapse.”

“So there’s no doubt that things have gotten better,” he added.

Seeking Patience

He also asked for patience.

Addressing “some critics in Washington,” Obama said many of the public works projects intended to boost the economy haven’t gotten fully under way, with only about a quarter of the total spending already committed.

“There’s a lot of misinformation out there about the recovery package,” Obama said in Virginia. “A lot of this is going to take time to complete. And it’s not solving all of our problems all at once.”

White House Press Secretary Robert Gibbs said that Obama decided to talk about the economy during a trip with two health-care town-halls to tell Americans that the country still has “a long way to go to create jobs.”

“He just wanted to provide people with an update on where we are,” Gibbs told reporters traveling with the president en route to Bristol, Virginia for his second event.

The president and his aides have been deflecting questions about whether the economy needs a second stimulus, saying most of the impact of the package passed by Congress won’t kick in until late this year and in 2010.

They also have stressed that the jobless rate, which Obama has said he expects will exceed 10 percent nationally this year, will lag behind other economic measures. The unemployment rate in June was the highest since August 1983.

“There is a bit of a lag here in people’s perceptions, in part because the economy is improving but the job market is still very poor,” said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.

To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.netEdwin Chen in Bristol, Virginia, at Echen32@bloomberg.net;