Obama: stimulus helped 'put brakes' on recession

WASHINGTON: President Barack Obama said on Saturday that new economic data indicated a huge stimulus package approved in February had helped "put the brakes" on a deep recession.

Obama, speaking in his weekly radio address, referred to figures released Friday that showed a narrower-than-expected 1.0 percent decline in GDP in the second quarter.

"The report showed that in the first few months of this year, the recession we faced when I took office was even deeper than anyone thought at the time. It told us how close we were to the edge," Obama said.

"But it also revealed that in the last few months, the economy has done measurably better than expected. And many economists suggest that part of this progress is directly attributable" to the 787 billion dollar economic stimulus package known as the Recovery Act, he said.

"This and the other difficult but important steps that we have taken over the last six months have helped put the brakes on this recession," he said.

The Recovery Act included help for homeowners in danger of foreclosure to pay their mortgages; measures to unfreeze credit markets; extensions of unemployment benefits; tax cuts for middle-income Americans; and "investments that are putting people back to work rebuilding and renovating roads, bridges, schools, and hospitals.

"Now, I realize that none of this is much comfort for Americans who are still out of work or struggling to make ends meet," Obama said, noting that unemployment figures out next week are likely to remain bleak.

However economic growth precedes job growth, he said, and the Friday report "is an important sign that we're headed in the right direction.

"Business investment, which had been plummeting in the past few months, is showing signs of stabilizing. This means that eventually, businesses will start growing and hiring again," he said.

Obama warned that a full recovery would take time. "It will take many more months to fully dig ourselves out of a recession -- a recession that we've now learned was even deeper than anyone thought," he said.

The Commerce Department report out Friday lent credence to forecasts that the world's biggest economy was close to emerging from a recession that began in December 2007.

The US jobless rate hit a 26-year high of 9.5 percent in June as more employers retrenched. Some expect the unemployment rate to rise to 10 percent or higher.

Commerce Department revised figures showed a 6.4 percent decline in the first quarter of 2009, worse than the previous estimate of a 5.5 percent drop. In the fourth quarter of 2008, the drop was revised to 5.4 percent instead of 6.3 percent.

Other revisions from 2008 showed a weaker GDP than originally estimated, with growth of 0.4 percent for the full year instead of 1.1 percent.

Some economists warn that rising unemployment could dampen any economic recovery.