Bush Economic Advisor: United States Economy Remains Resilient

George W. Bush (file photo)

President Bush's top economic advisor says the United States is showing remarkable resiliency during a period of enormous financial turmoil. From Washington, Michael Bowman reports.

Recent weeks have seen Wall Street's main stock index lose about a third of its value after the nation's biggest and best-known financial firms either failed or were bought out. A rash of U.S. home foreclosures is continuing amid rising unemployment and declining consumer spending.

Economic growth has slowed to a crawl, and the consensus view among economists is that the nation is entering a recession if it has not done so already.

The Chairman of President Bush's Council of Economic Advisors, Ed Lazear, is striking a positive note.

"This is an amazingly resilient economy," said Ed Lazear. "We have seen shock after shock [in] the housing market, oil prices going up to near $150 a barrel over the summer, credit markets tighten - all of those things are very difficult to get through, and yet the economy has gotten through it."

Lazear was speaking on CNN's Late Edition program.

He added that continued tight credit will make for what he termed "difficult months ahead" with higher unemployment.

"Some parts of the country have much higher rates of unemployment, and we are seeing what anyone would characterize as a recession in certain parts of the country," he said. "But the hope is that we have taken the steps to get things turned around, and we think we have."

Those steps include a massive financial rescue package President Bush signed into law earlier this month. Last week, the president announced the federal government will purchase stock in troubled banks to give them more capital and make it easier for them to lend money so that consumers and businesses can engage in beneficial economic activity.

Lazear says there are already signs that banks are willing to lend to each other - the first step in what he hopes will be loosening credit in the country.

He said the U.S. federal deficit will grow in the months ahead, but predicted it will shrink again if the economy rebounds and government spending is kept in check.