U.S. President Barack Obama warned on Monday that more U.S. job losses lay ahead despite a turnaround in the economy, and he called for a new post bubble growth model with greater focus on U.S. exports.
If Germany, a wealthy, highly unionized industrial nation, can generate 40 percent of its economy as export-based, then it seems to me that there is something we're missing that they are doing right, and we have got to figure that out, he told a meeting of his Economic Recovery Advisory Board.
German Chancellor Angela Merkel will meet Obama at the White House on Tuesday.
A sharp rebound in U.S. growth between July and September ended the worst economic slump in 70 years, but unemployment has jumped to 9.8 percent and is seen going higher.
We anticipate that we are going to continue to see some job losses in the weeks and months to come, Obama told the advisory board in a meeting shown on the White House website.
There is a -- always a lag of several months between businesses starting to make profits again and investing again, and then actually rehiring again, he said.
Obama said the economy was beginning to stabilize, but cautioned that it still had a long way to go and that policymakers need to find new models for future growth.
Are there mechanisms that we can start putting in place where we see the kind of growth that used to characterize the U.S. economy -- export-driven growth, manufacturing growth, he demanded of the panel, which included business leaders as well as former Federal Reserve Chairman Paul Volcker.
He said past U.S. growth had been debt-driven and that was no longer feasible. With the United States running record budget deficits as it spends furiously to try to stimulate the economy, Obama said it is going to be vital to find innovative new ways to finance growth, and the old approach would not do.
The kinds of current account deficits, trade deficits we were developing were not ones that would serve as a model for long-term economic prosperity, Obama said.
The U.S. current account deficit, which is the broadest measure of U.S. trade in goods and services with the rest of the world, has more than halved to 2.8 percent of gross domestic product from around seven percent before the economy crashed.
Obama, in a reference to the off-shoring of U.S. manufacturing jobs that has created simmering resentment among U.S. workers, said it may not be in America's interest to fight against ultra low-cost foreign producers, and argued that it should pursue higher-value jobs that help enrich the economy.
Part of what we want is an aggressive trade policy that says we can compete, we're not afraid of competing, we want to make sure we are competing in a fair way, and that other countries are not seeing the U.S. markets as simply the engine for their growth, without any reciprocity, he said.
Figuring out how to get that balance, I think, will be very important.
Free trade pacts with Panama, Colombia and South Korea have not yet been put to U.S. lawmakers for a vote as the Obama administration concentrates on an overhaul of the country's $2.5 trillion healthcare industry as its top domestic policy priority.
(Editing by Andrea Ricci)