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Obama calls recession a disaster

Cannot play media.You do not have the correct version of the flash player.Download the correct version President Obama announcing a new task force for middle-class working families President Obama has called the contraction of the US economy in the final quarter of 2008 a "continuing disaster" for the US. Speaking at the White House, he also announced a new task force to help middle-class working families. US economic output fell 3.8%, the worst quarterly contraction in more than 26 years, official figures have shown. It is the first time the United States has seen consecutive quarterly declines since 1991. The rate is annualised, which means that if the economy were to shrink at the same rate for a whole year as it did in the final quarter, it would shrink by 3.8%. Task Force President Obama said the task force, to be headed by Vice President Joe Biden, would focus on creating well-paid jobs for middle-class working families.  You cannot have a strong middle class without a strong labour movement  US President Obama Is the US heading for depression? He also said he wanted to "level the playing field" for labour unions, saying that strong unions needed to work "side by side" with strong businesses. "I do not view the labour movement as part of the problem. To me, it's part of the solution," he added. The president said he had signed three executive orders to help workers, ensuring - among other things - that federal contractors offer jobs to existing workers when contracts change. Vice President Biden said: "America's middle class is hurting. Trillions of dollars in home equity and retirement savings and college savings are gone. "A strong middle class equals a strong America. We can't have one without the other." The announcement went down well with union leaders. General president of the Teamsters union said: "It is a new day for workers. Hope for the American Dream is being restored." See how US GDP has evolved Grim reading The performance of the US economy between October and December was the worst since the first quarter of 1982.  This is a much more severe global downturn that had been anticipated  Scott Brown, Raymond James & Associates Although the 3.8% decline was not as bad as the 5.4% drop expected by the markets, analysts said the report still made grim reading. Spending on durable goods such as cars, furniture and domestic appliances plunged 22.4% during the quarter, the biggest drop in this figure since 1987. The amount spent on food and clothing dropped 7.1%, the steepest quarterly decline since 1950. Overall consumer spending was down 3.5%. Overall exports fell by 19.7%. The US recession in worsening Meanwhile, business equipment and software spending was down 27.8%, with spending by homebuilders down by 23.65%. Nigel Gault, chief US economist at Global Insight, said the figures "did not look healthy". Fellow analyst Scott Brown, chief economist at Raymond James & Associates agreed, saying the details "were pretty terrible". "This is a much more severe global downturn that had been anticipated," said Mr Brown. Stockpiling orders? Other commentators said the decline in fourth quarter GDP would have been much worse, were it not for a big increase in firms stockpiling goods they effectively couldn't sell. "The headline GDP figure was better than expected but this is very much an illusion supported by an unexpected increase in business inventories," said Sal Guatieri, senior economist at BMO Capital Markets. The data came as heavy equipment firm Caterpillar said it was cutting an extra 2,110 jobs. Global oil prices were up in Friday afternoon trading, lifted by growing signs producers cartel Opec will cut production, and the fact that the US GDP figure was - at least on the face of it - not as bad as expected. US light crude was up $1.34 to $42.78 a barrel, while London Brent had added $1.70 to $47.10. Stimulus package President Barack Obama's $819bn (£572bn) economic stimulus package passed through the House of Representatives on Thursday by a vote of 244 to 188. No Republicans backed the plan, saying it was too expensive and would not work. The Senate debates the plan next week, and it could face stiff opposition as the Democrats have a slimmer majority in the upper chamber. After Thursday's vote, President Obama urged members of Congress not to "drag our feet or allow the same partisan differences to get in our way". bbc