US president warns that economic rebound will take time
Updated
As many people predicted, the rebound on Wall street earlier this week was not to last the US stock market closed Wednesday down a massive 733 points.
It's prompted new fears about America's economic health, with President, George W Bush warning a rebound will take time.
Presenter: Kim Landers
Speakers: Ben Bernanke, chairman, US Federal Reserve; Henry Paulson, US Treasury Secretary; George W Bush, US president
KIM LANDERS: The United States has hit some new economic potholes.
Retail sales have plunged by the largest amount in three years - down by 1.2 per cent last month.
The bigger than expected decline increases the risk of a recession because consumer spending makes up two-thirds of American economic activity.
Adding to the economic worries, one of America's biggest banks, JP Morgan Chase and Company has reported an 84 per cent drop in its third quarter profit.
Meanwhile despite worldwide efforts to stabilise financial markets, the chairman of the US Federal Reserve, Ben Bernanke, is offering some somber warnings.
BEN BERNANKE: Stabilisation of the financial markets is a critical first step but even if they stabilise, as we hope they will, broader economic recover will not happen right away. Ultimately the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning.
KIM LANDERS: The president of the San Francisco Federal Reserve, Janet Yellen, says the US economy "appears to be in a recession".
It's not a word that Ben Bernanke is using.
BEN BERNANKE: Although much work remains and more difficulties surely lie ahead, I remain confident that the American economy, with its great intrinsic vitality and aided by the measures now available, will emerge from this period with renewed vigour.
KIM LANDERS: US Treasury Secretary Henry Paulson is also trying to reassure anxious Americans that relief will come, but patience is needed.
HENRY PAULSON: This will take time. There will be challenges. There will be a bump in the road, bumps in the road and I think as you see, our banks more confident and playing the role that we need them to play and expect them to play, we are going to see that confidence spread throughout the economy and there will be big improvement over time.
KIM LANDERS: After meeting his Cabinet today, President George W Bush is also vowing that "in the long run" the "economy will come back".
And he's promising that the US Government's decision to inject capital into American banks is a temporary one.
GEORGE W. BUSH: These banks will be privately controlled; most of the liquidity measures being taken are structured such that the Government will be a passive investor. There won't be government officials sitting on the boards of private companies.
KIM LANDERS: Meanwhile the Federal Reserve's new snapshot of business conditions across the nation shows the country has sunk deeper into an economic rut.
The report says economic activity has weakened across all of the Federal Reserve's 12 regional districts.
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