WASHINGTON — A top economic advisor to President Obama said Friday that there already were signs that the $787-billion stimulus plan was helping the economy.
However, in a speech at the Brookings Institution think tank, Lawrence H. Summers, chairman of the government's National Economic Council, said it was far too early to gauge the broad effect of the huge effort.
"But it is modestly encouraging that since it began to take shape, consumer spending in the U.S., which was collapsing during the holiday season, appears, according to a number of indicators, to have stabilized," Summers said.
He also pointed to early signs that the stimulus was helping. "It may retain 14,000 teachers in New York alone, and cops and teachers and public employees across state and local governments."
In addition, Summers said, tax cuts contained in the legislation will soon show up in workers' paychecks in the form of reduced withholding rates.
Summers was asked by a member of the audience what the business community could do to help speed the recovery.
"What we need today is more optimism and more confidence," he said.
"Those who have sound long-term strategy, who have investments that they want to make, who see productive opportunities, are going to find this a very good moment to make those investments," he said. "There are a very large number of things that are on sale today. Think about the cost of doing construction today, versus the cost of doing construction two years ago.
"My advice to business leaders is not to foreshorten the horizon at a moment like this."
Obama, who met Friday with former Federal Reserve Chairman Paul Volcker, head of his panel of outside economic advisors, sounded an upbeat tone when he took a question from reporters.
"If we are keeping focused on all of the fundamentally sound aspects of our economy, all the outstanding companies, workers, all of the innovation and dynamism in this economy, then we're going to get through this," the president said. "I'm very confident about that."
In his remarks, Summers, who served as Treasury secretary during the Clinton administration, came to the defense of the current Treasury chief, Timothy F. Geithner, who was harshly criticized last month for not delivering a detailed program for solving the banking crisis.
"You know, I think that Secretary Geithner has handled this in a difficult and courageous way," he said. "The easy thing to do would be . . . to lay out a nine-point plan with the illusion of specificity and the sense of certainty about what the future would bring."
The Associated Press was used in compiling this report.