President Bush said Friday that while there is some uncertainty about slowing economic growth, the nation’s “financial markets are strong and solid.”
Bush spoke after getting an update from his top economic advisers, who are helping him decide whether to offer a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.
“This economy of ours is on a solid foundation, but we can’t take economic growth for granted,” Bush said. “And there are signs that will cause us to be ever more diligent and make sure that good policies come out of Washington.”
Sitting around a table with his economic advisers in the Roosevelt Room, the president warned Congress against taking steps that would increase taxes. “If the foundation is strong yet indicators are mixed, the worst thing that Congress can do is raise taxes on the American people and on American businesses,” Bush said.
Bush met with the advisers — his first with them as a group — the same day that the Labor Department reported that hiring practically stalled in December, driving the nation’s jobless rate up to a two-year high of 5 percent. The report, which fanned fears of a recession, indicated that employment conditions are deteriorating, strained by the housing crisis and credit crunch that are sapping economic strength. On Wall Street, stocks tumbled.
“While there is some uncertainty, the report is that the financial markets are strong and solid,” Bush said.
He described the nation’s economic indicators as mixed.
He said there have been 52 straight months of job creation, but job growth slowed last month; core inflation is low, but U.S. consumers are paying more for gasoline and for food; and consumer spending is strong, yet the values of many U.S. homes are on the decline.
“For those of you who are paying more and are worried about your home, we understand that,” Bush said. “That’s why we have an aggressive policy to help creditworthy people stay in their homes.”
He urged Congress to pass legislation to help homeowners refinance. Bush also called for expanding petroleum refining capacity and exploring for energy in “environmentally friendly ways.”
“We have got to understand that if we are worried about gasoline prices, we ought to expand refineries here in the United States, and we ought to explore for oil and gas in environmentally friendly ways in the United States,” he said.
The White House is not ready to say if Bush will offer a stimulus package — possibly coinciding with his State of the Union address on Jan. 28.
Deputy press secretary Tony Fratto said before the meeting that the president and his advisers are looking at ways to keep the economy open for foreign investments, open up markets for U.S. exporters, and fight against efforts to raise taxes. They are also looking at shorter-term threats to economic growth, including the downturn in the housing market. Tax cuts are among the things being considered for a possible stimulus package, he said.
“We’re not ready to say whether we will, in fact, have something or not, at this point,” Fratto said. “We need a little bit more information. There are lots of ideas out there. Obviously tax policy is an important component, but we’ll see. We want to take in more data.”
Vice President Dick Cheney and other White House officials joined Bush in his meeting with his working group on financial markets, an interagency panel led by Treasury Secretary Henry Paulson that meets regularly to discuss market conditions and regulatory policy. Others around the table included: Federal Reserve Chairman Ben Bernanke; Chris Cox, chairman of the Securities and Exchange Commission; Walt Lukken, acting director of the Commodity Futures Trading Commission; Ed Lazear, chairman of the president’s Council of Economic Advisers; and Treasury Undersecretary Robert Steel.
On Monday in Illinois, Bush is expected to give a “status check” on the economy at the Union League Club of Chicago. The president, however, is not expected to tip his hand about what he might propose to reinforce the economy.
The December employment picture was much weaker than economists were expecting. They were forecasting the unemployment rate to bump up to 4.8 percent, not 5 percent.