Bush urges patience as slow growth in US confirmed

Other News Materials 28 February 2008 20:34 (UTC +04:00)

(dpa) - US President George W Bush Thursday said he did not believe the US economy was entering recession and urged patience before drawing conclusions on the next steps needed to bolster growth, after it was confirmed that economic growth slumped in the fourth quarter of 2007.

Bush acknowledged that growth has slowed and that there remained "economic uncertainty," but he said a 150-billion-dollar stimulus package passed by Congress was still working its way through the system and "should have a chance to kick in."

Tax rebate cheques that were part of the stimulus package would begin to be sent out in the second week of May, Bush said.

"I don't think we're headed to recession. But no question, we're in a slowdown," Bush said in a press conference at the White House. "Hopefully this pro-growth package will help."

Economic growth was reported at an annualized rate of 0.6 per cent in the fourth quarter of 2007 - a drastic drop from the robust 4.9 per cent in the third quarter.

The figures were the second set of estimates routinely released by the US Bureau of Economic Analysis, and confirm the slowing growth rate reported in late January.

The ongoing US mortgage credit crisis has eroded consumer confidence as house values fall, tens of thousands of people lose their homes and consumers spend less.

Central bank chief Ben Bernanke, who began painting a gloomy economic outlook to Congress Wednesday, continued his testimony later Thursday.

On the positive side, his hint Wednesday that the Federal Reserve could again cut interest rates was welcomed on Wall Street. The Federal Reserve twice slashed the interest rate in January, by a combined 1.25 points to 3 per cent to encourage more investment in the face of sluggish economic growth.

Last week, the bank lowered its forecast for growth in 2008 to between 1.3 and 2 per cent. In June, before the mortgage credit crisis broke, the Fed predicted growth of between 2.5 and 2.75 per cent.