Obama warns spending cuts jeopardize the U.S. economy

U.S. President Barack Obama says the government spending cuts that took effect in March are hurting the American economy.

“It’s slowed our growth,” Obama said at a White House news conference Tuesday. “It’s thrown people out of work.”

The spending cuts came as Obama and Republican opponents in Congress failed to agree on plans for taxes and spending. The impasse meant automatic cuts for government programs and furloughs of some government workers. About 1,500 air traffic controllers were laid off each day last week until Congress reversed the action as flight delays mounted.

As he has in the past, the president called on Congress to reach an agreement that could cut the country’s burgeoning national debt, while investing in programs to fix the nation’s infrastructure and promote education and research. But the White House and Republicans differ sharply over what financial policies the government should adopt.

Earlier in the day, new reports showed the U.S. economy — the world’s largest — is improving on some fronts. U.S. home prices rose the most in seven years in February, gaining more than 9 percent in the previous 12 months. Economists say the data from Case-Shiller is probably evidence that the housing market is strengthening. A separate report showing a decline in foreclosures also points to an improving housing market.

CoreLogic data shows foreclosures in March were down nearly 16 percent from the same month a year earlier.

The improving housing market, and generally rising stock market prices, may be the reason that U.S. consumer confidence moved sharply higher in April. Economists track consumer confidence for clues about the consumer spending that drives most U.S. economic activity. The owners of new, small businesses also report increasing confidence. A Kauffman Foundation study shows most people running start-up businesses think profitability will improve over the next year.

But the U.S. economy is still plagued by high unemployment, which is expected to stay at 7.6 percent this month. A report from Accenture says four out of 10 recent college graduates say they are underemployed, taking jobs that do not require the degrees they earned and paid for.

This and other data are likely part of the discussion Tuesday and Wednesday as top officials of the U.S. central bank meet to assess the economy and decide how much they will try to stimulate it with low interest rates and other policies.

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