Obama speech fails to prop up markets

US STOCKS accelerated declines yesterday after comments from US President Barack Obama did little to soothe investors anxious over the slowing pace of the recovery.

Obama said he and his economic team discussed additional steps to promote economic growth, including looking at tax cuts for businesses. Stocks had been trading lower prior to the comments and the losses picked up steam. The Dow Jones industrial average dropped 140.92 points, or 1.39 per cent, to 10,009.73

The American president also said the US economy was expanding, but not quickly enough, and there was no “magic bullet” that will fix its problems.

Gloomy reports on gross domestic product and housing have raised fears the fragile economy could slip back into a recession or face a lengthy period of growth that is too slow to make much of a dent in the 9.5 per cent unemployment rate.

Obama said that his administration had anticipated the data and he now faces a dilemma in trying to reassure Americans about the economy without appearing to be out of touch with frustrations.

He has also urged the US Congress to pass some of his existing proposals such as plans aimed at spurring lending to small businesses and tax breaks for such firms.

Falling stockmarkets in the US overshadowed a glimmer of light in Europe and the UK, where consumer confidence appears to be improving. The GfK UK consumer confidence index last night showed its first gain in five months, up four points to -18. The European Commission economic confidence survey also hit a 29-month high.