President George W. Bush said Friday that while the current economic crisis has sent shock waves around the world, he believes steps taken by his administration have "laid the groundwork for a return to economic growth and job creation" early in the administration of President-elect Barack Obama.
"The American economy has consistently proven its strength and resilience" Bush wrote in his final economic report to the nation.
He said this resilience has continued despite multiple blows to the economy.
Bush's statement came at the beginning of the annual report of the White House Council of Economic Advisers.
Those advisers predicted "a strong economic recovery early in the term of the next administration."
Bush said that a combination of factors rose to "threaten the entire financial system and generated a shock so large that its effects have been felt throughout the global economy."
"Under ordinary circumstances, it would be preferable to allow the free market to take its course and correct over time," he said. But, Bush added, the potential financial damage to households and businesses was so severe that "unprecedented government response was the only responsible policy option."
"A measure of stability has returned to the financial system," Bush said.
He warned that "temporary government programs" established to deal with the crisis "must remain temporary and be unwound in an orderly manner as soon as conditions warrant."
In the underlying economic report, Bush's economic advisers said that while the economy had in fact proven itself " remarkably resilient" over Bush's two-term presidency, there is a "risk that recent events may overshadow the many positive developments of the past eight years."
The advisers suggested that the economic downturn, reflected in the half-percentage-point contraction in the gross domestic product in the final quarter of 2008, will likely continue in the first half of 2009. The White House panel noted that "most market forecasts" suggested a recovery beginning in the second half of 2009 "that will gain momentum in 2010 and beyond."
Looking ahead, the president's economic advisers said the global financial crisis presents several remaining challenges for the U.S. government: the need to modernize financial regulation, unwind temporary programs, and develop a long-term solution for dealing with mortgage giants Fannie Mae and Freddie Mac, now essentially under control of the government.
And Bush's advisers didn't miss an opportunity to put in a final political plug for the president's unfinished agenda, just five days before he leaves office.
"There remains considerable opportunity to strengthen our economic position by eliminating the uncertainty surrounding tax relief that is scheduled to expire."
It was a pitch to make permanent the Bush tax cuts that expire at the end of next year.