US economy saved from 'catastrophe'

President Barack Obama on Friday seized on a surprise drop in job losses to proclaim his policies had staved off economic catastrophe, seeking new momentum after days of draining political attacks.

The new data - which showed unemployment dip to a better-than-expected 9.4 percent in July, turned a White House damage control exercise into a boost for Obama's fortunes.

The president warned however the economy still faced a gruelling climb out of a deep valley, and aides said the jobless rate was still likely to top 10 percent this year."This morning we received additional signs that the worst may be behind us," said Obama in remarks relocated from a military barracks to the ceremonial surroundings of the sun-drenched White House Rose Garden."We are losing jobs at less than half the rate we were when I took office. We have pulled the financial system back from the brink," said Obama, warming to a counter-attack against Republican assaults on his economic policies.The president argued that his mammoth 787-billion-dollar stimulus plan, financial industry rescues and mortgage crisis measures had revived credit markets, and boosted stock markets on which Americans rely for pensions.

"While we have rescued our economy from catastrophe, we have also begun to build a new foundation for growth," Obama said, but he also warned that tough times lay ahead before the economy would be restored to full prosperity."We have a steep mountain to climb and we started in a very deep valley."We have a lot further to go. As far as I'm concerned, we will not have a true recovery as long as we're losing jobs, and we won't rest until every American that is looking for work can find a job."The Labor Department's much-awaited monthly report was better than expected by private economists, who had forecast a loss of 325,000 jobs and a jobless rate rising to 9.6 percent from the June level of 9.5 percent.Last week, in another ray of hope, the government estimated that the economy contracted 1.0 percent in the second quarter, better than forecasters had expected.Tentative signs of a turnaround come at a key moment for Obama's presidency, now 200 days old, as he faces increasing opposition from Republicans and health industry lobbyists over his healthcare reform drive. -AFP