UPDATE 1-Obama sees no recession risk but more jobs needed

Tue Jun 7, 2011 6:55pm GMT
 

* Obama says U.S. job creation still too slow

* Says not clear if May was blip or start of trend

By Alister Bull

WASHINGTON, June 7 (Reuters) - President Barack Obama on Tuesday dismissed the risk of the United States slipping back into recession as poor jobs data raised fresh doubts among Americans over his handling of the economy.

"I'm not concerned about a double-dip recession. I am concerned about the fact that the recovery that we're on is not producing jobs as quickly as I want it to happen," Obama told a news conference with German Chancellor Angela Merkel.

More Americans than ever disapprove of how Obama is handling the economy and the budget deficit amid frustration over the slow pace of recovery, according to a Washington Post-ABC News poll published on Tuesday. [ID:nN07303542]

Obama, a Democrat who is seeking re-election in 2012, offered a sober assessment of the challenges ahead and urged Americans not to lose faith in his stewardship of the economy.

"Our task is to not panic, not overreact, to make sure that we've got a plan, a path forward in terms of how we make our economies competitive," he said.

The U.S. economy created just 54,000 new jobs in May compared with forecasts for 150,000, while the jobless rate edged up to 9.1 percent from 9 percent the month before.

"We don't yet know whether this is a one-month episode or a longer trend," Obama said, blaming high gasoline prices for denting family budgets and sapping consumer confidence.

The Washington Post-ABC News poll found that 59 percent of Americans, a new high, give Obama negative marks on the economy compared with 55 percent a month earlier.

The survey underscored Obama's vulnerability on the economy, an issue opposition Republicans are keen to exploit in the 2012 election campaign.

RECOVERY DOUBTS

The May jobs numbers followed weaker readings from the housing sector and manufacturing, prompting some analysts to lower their forecasts for U.S. growth.

They see little scope for the president to deliver much more economic stimulus, with the House of Representatives controlled by Republicans who stoutly oppose any more government spending that adds to the U.S. debt and deficit.

Obama, citing measures including a tax compromise with Republicans last year and tax breaks on business investment, said he was interested in talking with lawmakers from both parties about continuing some of the steps.

He signed a $814 billion stimulus package in 2009 that the administration said saved millions of jobs.

But Obama has little political support for another big spending bill and will likely have to concede painful spending cuts to win Republican support to raise the $14.3 trillion U.S. debt ceiling before an Aug. 2 deadline.

Financial markets are growing increasingly nervous over political gridlock in Washington.

"We all know you cannot continue to spend what you don't have. With our economic growth somewhat stymied, the deficits are daunting," said Rodger Riney, chief executive of St. Louis-based Scottrade.

"It just seems like politicians refuse to come to grips with what needs to be done. Until they do, it worries me." (Additional reporting by Laura MacInnis and Jack Reerink; Editing by John O'Callaghan)

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