June 23 (Bloomberg) -- President Barack Obama said a second stimulus package isn’t needed yet, though he expects the U.S. unemployment rate will exceed 10 percent this year.

“I think its important to see how the economy evolves and how effective the first stimulus is,” Obama said at a White House news conference.

He said it is “pretty clear” that unemployment will continue rising before the recovery takes hold and said it isn’t surprising that initial forecasts from his administration missed the mark.

The economy has lost about 6 million jobs since the recession began in December 2007. The jobless rate jumped to 9.4 percent in May, the highest in more than 25 years.

Obama signed the $787 billion stimulus bill in February, and his chief economic advisers had forecast it would help hold unemployment below 8 percent. It included tax cuts and spending on infrastructure projects that the president pledged would save or create 3.5 million jobs.

“I don’t feel satisfied with the progress that we’ve made,” Obama said. He cited the need to speed up distribution of stimulus funds and do more work with a program to modify existing mortgages, which hasn’t “been keeping pace with all the foreclosures that are taking place.”

Foreclosures

Foreclosure filings in the U.S. surpassed 300,000 for a third straight month in May and may reach a record 1.8 million by the first half of the year, RealtyTrac Inc. said June 11.

The median price of an existing home has fallen 26 percent from the peak reached in July 2006 as sales slumped and financial institutions auctioned off foreclosed properties. While the losses have devastated some families, others were able to buy a house for the first time because of the drop in values.

Obama defended his initial stimulus projections, saying the economy worsened once the legislation was enacted only weeks into his presidency.

“Nobody understood what the depths of this recession were going to look like,” Obama said. “It was only significantly later that we suddenly get a report that the economy had tanked.”

“It’s not surprising, then, that we missed the mark in terms of our estimates of where unemployment would go,” he said.

Worse Layoffs

Obama said without the stimulus legislation, the recession would have been worse and states would have been forced to lay off more teachers, police officers and firefighters.

Stephen Stanley, chief economist at RBS Securities Inc. in Stamford, Connecticut, said a second stimulus isn’t necessary and may be counter-productive because of the impact on the deficit.

“The stimulus hasn’t provided any impetus to growth,” he said. “In light of the record so far, I don’t think there’s a crying need for a second program.”

Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said it’s still too early to tell.

If unemployment is “well into the double digits” and still rising, it would indicate broader problems in the economy and serve as a catalyst for more policy action, he said.

“If it doesn’t look like the economy is going to revive, come out of recession in any significant way, then I think another stimulus package will come back on the agenda,” he said. “Both politics and economics will come together and argue for another round.”

Spending and Deficits

Obama sought to address growing public concern about his spending plans and the deficit, which the Congressional Budget Office projects will hit a record $1.85 trillion this year.

While saying legislation to enact his health-care overhaul and “clean energy” proposals are crucial to future U.S. economic growth, Obama said both initiatives “must and will be paid for.”

Revamping the health-care system “will not add to our deficits” and will be paid for “through savings and efficiencies,” he said. “Our top priority has to be control costs.”

While the latest Washington Post-ABC News poll showed Obama with an overall approval rating of 65 percent, his handling of the federal budget deficit received positive marks of only 48 percent.

Obama said at his news conference that Federal Reserve Chairman Ben S. Bernanke has “done a fine job under very difficult circumstances.” He declined to answer a question about whether he would reappoint Bernanke, whose term ends in January 2010, saying he was “not going to make news” on that subject.

He said that, while the Fed could have done a better job anticipating systemic risks to financial markets, it has “performed better” than other regulators in responding to the economic crisis.

“Since the crisis has occurred, Ben Bernanke has performed very well,” Obama said.

To contact the reporters on this story: Hans Nichols in Washington at Hnichols2@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

Last Updated: June 23, 2009 16:01 EDT