President Barack Obama on Friday prodded large U.S. banks to boost lending to Main Street and cautiously welcomed news of an unexpected drop in the unemployment rate.
Obama, whose domestic popularity has taken a hit amid frustrations over job losses, visited a metal-working plant and a community college in Allentown, Pennsylvania, as part of a series of events this week aimed at shoring up confidence in his handling of the economy.
In a town hall-style forum at the college, he said he was aware of the toll the “brutal recession” had taken on people’s lives and pledged to do all he could to spur job creation. Allentown is an industrial city hard-hit by the downturn.
“Every one of us knows somebody who has been swept up by this storm,” Obama said. “Neighbors who have lost their homes or their health care, friends who have used up their savings or put off their retirement, relatives who have downscaled their dreams — or dropped them entirely.”
“I promise you this: I won’t rest until things get better,” he added.
Republicans have sought to hammer Obama over the economy, saying the still-sluggish conditions are evidence that his remedies, such as a $787 billion economic stimulus package, are not working.
Obama, who plans to deliver a speech on Tuesday outlining new steps to bolster the economy, is mulling offering tax incentives for firms that hire new workers as well as breaks for people who weatherize their homes.
But the skyrocketing U.S. budget deficit, which hit $1.4 trillion in the latest fiscal year, poses a dilemma for Obama because any new government spending aimed at jumpstarting growth would risk exacerbating the deficit.
Another concern for the U.S. leader is that anxiety about the economy could affect his Democratic Party’s chances in the 2010 congressional elections. The Democrats currently control Congress.
In Allentown, where Obama discussed the economy with local business owners over a cheeseburger at a diner, the president said that one of the keys to reviving growth was to try to encourage greater lending to small businesses.
Obama said his administration would work with banks to try to improve lending conditions.
But he also said large financial institutions that benefited from the government’s $700 billion financial bailout had an obligation to do what they could to make credit available to firms and allow them to hire staff.
“Part of what our message to the banks is, the taxpayers were there for you to clean up your mistakes,” Obama said. “You now have a responsibility to be there for the community now that we’re bearing the brunt of a lot of these problems that you caused.”
He said he hoped to meet with bankers sometime “before the end of the year to say to them, look, you have a responsibility now, now that we have pulled you back from the brink.”
The bank bailout package, which Obama inherited from the Bush administration, is unpopular with many Americans. Their anger has been further piqued by the granting of large bonuses at financial institutions that have returned to profitability after they had been bailed out by the federal government.
Earlier on Friday, the Labor Department reported that the unemployment rate had unexpectedly ticked downward in November to 10 percent from 10.2 percent in October.
In an another hint of improvement in the bleak jobs market, the report also said the pace of job losses in November slowed to 11,000 after a reduction of 111,000 in October.
The unexpectedly smaller decline in jobs initially lifted stock prices, though they later shed their gains.
Obama called the report a “hopeful sign.”
But, he said, “We’ve got a lot more work to do before we can celebrate, because even though our economy is now growing again, a lot of companies are still hesitant to hire. They’re still worried about hiring.”
John Boehner, the Republican leader in the U.S. House of Representatives, noted the fact that the unemployment rate was still in the double digits.
He also said Obama’s proposals to overhaul the U.S. health care system and make it easier for unions to organize would dampen hiring.
“The job-killing agenda that the president supports that’s moving through the Congress has to be stopped,” Boehner said. “It scares employers to no end.”