Bush sees 'storm clouds' over US economy


Published: Monday December 17, 2007

US President George W. Bush on Monday said the US economy was basically strong but warned of "storm clouds" in the form of a credit crunch and what may be a bursting housing bubble.

"This economy is pretty good. There's definitely some storm clouds and concerns, but the underpinning is good, and we'll work our way through this period," Bush said in a town hall-style question and answer session here.

The US president's comments came as part of a defense of his economic policies, especially the giant tax cuts of his first term, which he says stimulated the US economy out of a downturn, while critics note that they have fed a soaring US national debt.

Bush also acknowledged anxiety about a crisis in the once-booming US housing market, saying: "I am concerned, I know you're concerned, about the housing industry -- we all should be."

"We've been building a lot of homes, and all of a sudden fewer buyers are showing up. And it's going to take a while to work through the housing bubble, but we can mitigate some of the issues," he said.

Analysts say that a mortgage relief package brokered by the Bush administration is likely to ease the pain of the US housing slump, but with an uncertain cost for markets and the financial system.

The program was unveiled earlier this month amid fears that a rising tide of home-loan defaults could have a cascading economic impact.

"I hope you can tell I'm an optimistic fellow. We've been through a lot over the last seven years, we really have. But I'm absolutely convinced this country is strong and vibrant," said Bush.