President Barack Obama ended a two-day summit of world economic leaders with his appeals for more ambitious action to safeguard economic growth unmet by congressional leaders at home or his counterparts abroad.
World leaders at meeting of the Group of 20 nations in Cannes, France, balked at committing new funds to help bail out the euro-area, demanding the continent’s own governments first do more to fix the two-year-old debt crisis. In the U.S., Obama’s plan to revive hiring remained stalled in Congress.
Obama’s stay in Cannes was capped by a Labor Department report yesterday that job growth fell to 80,000 in October even as the unemployment rate unexpectedly dropped to 9 percent from 9.1 percent in September.
At a closing news conference dominated by domestic concerns, Obama called the drop in the jobless rate “positive,” even as he conceded that the U.S. economy’s progress is “way too slow.” He said hopes the unemployment report prompts Congress to act on his proposals, including tax cuts and spending.
“There’s no excuse for inaction,” he said. “That’s true globally and it’s certainly true back home right now.”
The debt crisis in Europe and the struggle to come up with a rescue plan for Greece overshadowed efforts by the Group of 20 nations to promote global growth. Stocks, the euro and Italian bonds slid as a disagreement emerged at the meeting on boosting the International Monetary Fund’s resources.
Greece and Italy
The reluctance of the leaders of the world’s biggest economies to immediately channel funds to the euro area reflects frustration with Europe’s failure to end a crisis that sparked again this week, with Greece’s government lurching toward collapse and Italy facing intensifying pressure to restore fiscal order.
European leaders face ‘more hard work ahead and more difficult choices to make,” Obama said.
He also said he got “a crash course in European politics” while in Cannes.
In individual and group meetings Obama sought to keep the focus on the steps needed to stem the debt crisis and beyond the political pressures in individual countries, said an administration official who wasn’t authorized to discuss the matter publicly.
U.S. actions in the aftermath of collapse of Lehman Brothers Holdings Inc. in September 2008 repeatedly came up as examples of the tools that can be used, the official said.
“What we’ve seen is all the elements for dealing with the crisis put in place,” Obama said. Financial markets are looking for a “strong signal” from European governments that they are standing firmly behind the euro.
The Standard & Poor’s 500 Index lost 0.6 percent to close at 1,253.23 at 4 p.m. in New York, paring a drop of as much as 1.8 percent. The Stoxx Europe 600 Index retreated 1 percent as the euro weakened 0.3 percent to $1.3777. Ten-year Italian bond yields rose to a euro-era high, while rates on 10-year German debt capped the biggest weekly drop on record.
“The European political leadership, understands how much of a stake they have in making sure that this crisis is resolved, that the euro zone remains intact,” Obama said.
While in Cannes, Obama met separately with German Chancellor Angela Merkel and French President Nicolas Sarkozy, leaders of Europe’s two biggest economies and the drivers of attempts to win agreement on a rescue plan.
Economy and Currency
The G-20 also moved toward goals for “rebalancing” the global economy, including on China’s valuation of its currency, Obama said. In its final communique, the G-20 beefed up language on exchange rates by vowing to “move more rapidly toward market-determined.” In an appendix they highlighted China’s “determination” to increase the yuan’s flexibility.
China is showing increased willingness to let the yuan appreciate, Obama said. “This is something we’ve been calling for for some time, and it will be a critical step in boosting growth,” he said.
The yuan reached a 17-year high yesterday rising 0.19 percent to close at 6.3392 per dollar in Shanghai, according to the China Foreign Exchange Trade System.
Even with Europe’s debt crisis weighing on global growth, Obama said that the U.S. as the world’s largest economy will play a key role in driving expansion. He used a question on U.S. economic leadership to promote his jobs plan and defend his record.
Obama, who faces re-election next year, offered “a simple way of thinking about” his track record.
“When I came into office, the U.S. economy had contracted by 9 percent, the largest contraction since the Great Depression,” he said. “A little over a year later, the economy was growing by 4 percent, and it’s been growing ever since.”
The economy has grown at an average pace of 1.4 percent during the first nine months of this year.
“We’re going to keep on pushing,” he said of his campaign to press Congress to act on his proposals and his vow to use executive authority wherever possible to promote hiring and growth.
“But if we’re going to do something big to jumpstart the economy at a time when it’s stabilized but unemployment is way too high, Congress is going to need to act,” he said.
Republican opposition to tax increases on the nation’s wealthiest individuals and spending more on infrastructure and aid to states has blocked passage of the $447 billion jobs plan Obama unveiled in September.
The administration and congressional Democrats since have tried pushing through individual components of the proposal. The Senate this week blocked a measure to provide $60 billion for work on the nation’s transportation system and create an “infrastructure bank” to leverage capital for more such projects.
Before leaving France, Obama joined with Sarkozy to honor members of both nations’ armed services who took part in the campaign that helped drive Muammar Qaddafi from power in Libya. He also participated in a joint interview with Sarkozy for French television. Sarkozy, like Obama, faces re-election next year.
“We need the United States of America to achieve growth,” Sarkozy said in the interview, “and they need a stable Europe.”