President Barack Obama said today that the US must figure out how to control its long-term deficit without hurting economic recovery, which remains hobbled by the overabundant housing market.
President Obama acknowledged the deficit is worrying Americans and said cutting it would raise the public's confidence.
'People, consumers, are not going to start spending until they feel a little more confident that the economy's getting stronger,' Obama said.
The US budget deficit is expected to reach $1.47 trillion for the 2010 fiscal year. Republicans have balked at plans to stimulate the economy with additional spending, citing the record deficit. Democrats in turn want to eliminate tax cuts for the richest Americans to address the same issue.
US growth slowed in the second quarter, sparking fears the country might suffer a double-dip recession after climbing out of the worst economic slump since the Great Depression.
Obama said housing oversupply was obstructing the recovery. 'The housing market is still a big drag on the economy as a whole,' Obama said. 'It is going to take some time for us to absorb this inventory, that was really too high,' he added.
Sharply rising prices encouraged far more homes to be built than were needed and overhang of inventory will take time to mop up. 'We were building 2 million homes a year when only 1.4 million were being absorbed,' he said.
