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Bush sanguine about economy's prospects

In a luncheon speech, the president points to job growth as a basis for optimism. Democrats say he's out of touch.

December 18, 2007|James Gerstenzang | Times Staff Writer

FREDERICKSBURG, VA. — President Bush said Monday that the nation's economy was troubled by "storm clouds and concerns" but asserted that its fundamental elements remained strong.

With the stock market acting like a yo-yo, the Federal Reserve working to stave off recession and the administration promoting a plan to aid homeowners with escalating mortgage payments, the president looked to the past to calm fears about the future.

Citing 51 straight months of job growth, Bush said at a Rotary Club luncheon in this city 50 miles south of Washington, "We've had a pretty good economic run here in the country."

Bush spoke as the U.S. Conference of Mayors reported that foreclosures, increased living expenses and higher food costs were leaving more families hungry, with 80% of the cities surveyed reporting that requests for emergency food assistance had increased over the last year.

In Los Angeles, the mayors group reported, the need for food assistance grew, but the amount of food available to hunger programs dropped by 11% largely because commodities provided by the U.S. Department of Agriculture were cut back, leading food banks to turn away hungry people.

Adding to the mixed bag of economic reports, the Commerce Department said U.S. exports were surging, thanks in large part to the weak dollar. It said that the U.S. trade deficit, which has been at record highs for five years, declined in the third quarter this year, to its lowest level in two years.

The country imported $199.7 billion more in goods than it exported, but an increase in the export of services helped trim the third-quarter trade deficit to $178.5 billion -- a decline of 5.5% since the second quarter.

Bush's immediate focus was the effort by Congress to complete work on the budget by the end of the week.

"Congress cannot take economic vitality for granted," he said, referring to the challenges posed by housing and credit issues.

Reiterating what has become his antitax mantra, Bush said, "If you want to figure out a way to slow this economy down, just start taking money out of people's pockets."

Still, he said, Congress and the administration were "making some pretty good progress toward coming up with a fiscally sound budget."

Bush's remarks, delivered to about 100 people at the Stafford County Rotary Club's weekly luncheon, drew quick challenges from Democratic congressional leaders.

Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, said in a written statement that the administration was looking at the economy "through rose-colored glasses" and Bush was "out of touch with the economic realities."

House Speaker Nancy Pelosi (D-San Francisco) said Bush's comments suggested that he failed "to grasp that middle-class families are working harder but earning less" while dealing with higher gasoline and home heating costs and the mortgage crisis.

The president spoke for nearly an hour, responding to questions for half the session. In response to one query about local traffic problems, he joked that he had encountered no delays during his flight aboard the Marine One helicopter. In a more serious vein, he said he was intrigued by the idea of "congestion pricing" to discourage use of some roads during high-traffic periods.

When a financial planner asked his predictions for the stock market in 2008, he begged off. "I don't think you want your president opining on whether the Dow Jones is going to be going up or down," he said.

james.gerstenzang@latimes.com

Times staff writer Maura Reynolds in Washington contributed to this report.

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