Japan, Europe and fuel slowing US economic recovery: Obama

WASHINGTON: President Barack Obama is pointing to problems in Japan and Europe as challenges for the US economy, placing some blame on events abroad for a domestic recovery that is showing signs of slowing down.

Government data released on Friday showed employers in May hired the fewest number of workers in eight months and US unemployment rose to 9.1 percent, up from 9.0 percent in April.

That bump is a political challenge for the president, whose re-election in 2012 may depend on his ability to convince voters that his economic policies have been successful.

Part of his pitch will include steering attention to outside forces as causes for economic woes at home.

The president did just that in his weekly radio and Internet address, broadcast on Saturday, by highlighting “head winds” that are affecting the United States.

“Even though our economy has created more than two million private sector jobs over the past 15 months and continues to grow, we’re facing some tough head winds,” he said.

“Lately, it’s high gas prices, the earthquake in Japan, and unease about the European fiscal situation. That will happen from time to time. There will be bumps on the road to recovery.”

Republicans have zeroed in on those bumps, too, saying they are evidence that Obama’s policies are not working.

Republican Senator Lamar Alexander, in his party’s radio address, emphasized the need for more private sector job growth and flexibility with unions -- a key constituency for Obama’s Democrats.

“Our goal should be to make it easier and cheaper to create private-sector jobs in this country,” Alexander said. “Giving workers the right to join or not to join a union helps to create a competitive environment in which more manufacturers like Nissan and Boeing can make here what they sell here.”

Weakness in private sector job growth is becoming a key talking point for Republicans, who see it as as a vulnerability for Obama ahead of the 2012 election.

The president, meanwhile, repeated his case that his administration’s policies have helped job growth in the U.S. auto industry, revived from near collapse with the support of government bailouts.

“All three American automakers are now adding shifts and creating jobs at the strongest rate since the 1990s,” he said.

“That’s remarkable when you think about where we were just a couple of years ago.”

Obama on Friday greeted workers and toured a Chrysler plant in Toledo, Ohio, as he reminded voters that his 2009 auto bailout saved thousands of U.S. jobs.

OECD head sees world recovery slowing

Reuters :The global economic recovery is slowing although it’s unlikely to turn into a double dip recession, OECD chief Angel Gurria said on Friday.

The head of the Paris-based Organisation for Economic Co-operation and Development spoke after a report showed unexpectedly weak U.S. jobs growth in May, which knocked global stock markets lower.

“There is ... information that probably confirms that some of the downside risks we mentioned are probably materializing,” he told Reuters on the sidelines of a conference in Ottawa. “Within the generalized recovery, we are seeing a slowdown.”

The OECD last month said the global economic recovery is on track, helped by a stronger United States, but threats ranging from high oil prices to European sovereign debt crises could yet combine to create a bout of stagflation.

Gurria also said on Friday he was seeing loan growth retrenchment from both consumers and banks.

“What you have is a situation where both on the side of the psychology of the consumers and also on the side of the providers of the loans you have a retrenchment. You have less supply and less demand,” he said.

The OECD chief said deficits and debt levels were unsustainable in many countries and that with a weakening of growth governments would be tempted to delay fiscal consolidation. But he warned this would be the wrong choice.

“Staying the course is always a good idea,” he said. “We believe what you have here is one of the most difficult balancing acts that governments have to do.”