WASHINGTON, (Reuters) – U.S. President Barack Obama said yesterday his economic measures were starting to work but government data showed an unexpected drop in U.S. retail sales in March and U.S. stocks retreated sharply.
Goldman Sachs <GS.N> sold $5 billion of stock, a day after the bank sparked confidence with its first-quarter profit, saying it wanted to pay back $10 billion in government bailout money it does not need.
But a source familiar with the Obama administration’s thinking said the U.S. Treasury was worried Goldman’s repayment could make other banks appear weak.
In Europe, disappointing earnings at Dutch electronics giant Philips <PHG.AS> added to evidence the recession was still taking its toll, while Swiss bank UBS <UBSN.VX><UBS.N> was set to cut more jobs.
Obama said moves to recapitalize banks, strengthen the housing market and rescue the auto sector were “necessary pieces of the recovery puzzle.”
“And taken together, these actions are starting to generate signs of economic progress,” he said in a speech on the action taken since he took office. “There is no doubt that times are still tough. By no means are we out of the woods yet.”
Blaming “irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street,” Obama appeared to be trying to reassure Americans of better times ahead as his presidency nears the symbolic 100-day mark.
His efforts have support, with a Gallup poll released on Monday showing some 71 percent of Americans were confident Obama will manage the economy properly.
The steps by Obama’s team to kick-start the world’s largest economy are being closely watched by policy-makers worldwide, although differences persist about how to stimulate growth and look after businesses and workers at home.
In Geneva, envoys to the World Trade Organisation agreed there was no imminent threat of tit-for-tat protectionist wars but also that there was no room for complacency. Russian Finance Minister Alexei Kudrin said Moscow may borrow abroad next year for the first time in a decade.
“For us, it will take several years to exit the crisis,” Kudrin told a ministry meeting. Spanish Prime Minister Jose Luis Rodriguez Zapatero, who last week fired his economy minister, said Madrid was ready to implement more economic stimulus measures if necessary.
U.S. Federal Reserve Chairman Ben Bernanke said there were hopeful signs, including the latest data on home sales, homebuilding and consumer spending, as well as sales of new cars.
“A leveling out of economic activity is the first step toward recovery,” he said in a speech.
But both Bernanke and White House adviser Christina Romer said the economy was still contracting.
Investors will get fresh insights into the health of U.S. manufacturers on Wednesday with industrial production data that is expected to show a drop of 1 percent in March, narrower than the 1.5 percent slide in February.
Over the next week or so, heavyweight industrial companies including General Electric <GE.N>, United Technologies <UTX.N> and 3M <MMM.N> will report quarterly results that are forecast to feature double-digit falls in profit.
At Caterpillar <CAT.N>, the news may be particularly stark, with most analysts predicting the world’s No. 1 maker of building equipment will be the first blue-chip industrial to report a quarterly loss in this downturn.
U.S. stocks [.N] ended down more than 1.5 percent as the poor numbers for retail sales and falling producer prices offset better-than-expected quarterly results from healthcare group Johnson & Johnson <JNJ.N>.
General Motors <GM.N> shares slipped from earlier highs after the auto giant’s bondholders said completing its restructuring outside bankruptcy was increasingly less likely. GM, operating with $13.4 billion in emergency federal loans, has until June 1 to win concessions from bondholders and the auto workers union.
