Skip to main content

Economy needs private sector boost, Goolsbee says

By the CNN Wire Staff
  • Long-term trends are good despite bad May reports, Goolsbee says
  • The private sector must become the driver of recovery, he says
  • Goolsbee appears on CNN's "State of the Union"

Washington (CNN) -- The private sector must become the driver of a still fragile economic recovery buffeted by high gas prices, the Japanese earthquake and tsunami and other "headwinds" so far this year, President Barack Obama's top economic adviser said Sunday.

Austan Goolsbee, chairman of the White House Council of Economic Advisers, told CNN's "State of the Union" that the administration's focus is on strengthening business investment and expansion to keep the recovery going.

The latest economic reports showed a slowdown in job creation and manufacturing, while home prices continued to fall -- all signs of continuing uncertainty that harms consumer and business confidence.

With the unemployment rate at 9.1 percent, Republicans have hammered Obama's economic policies, with GOP presidential candidate Mitt Romney calling them a failure.

Goolsbee warned against reading too much into one month's reports, noting 1 million jobs have been added to the economy over the past six months despite the slowdown in May reported Friday.

However, he conceded the situation remains delicate.

"There's no question as you come out of the worst downturn in most of our lifetimes, that it is going to be fragile," Goolsbee said of what he called the worst recession since the Great Depression of more than 80 years ago.

Through steps such as the December political agreement that lowered payroll taxes and a look at streamlining government regulations, the administration is trying to boost private sector investment and overall involvement in the recovery, he said.

"Corporations have started to become profitable again," Goolsbee said. "There's money sitting on their balance sheets."

The question is how to you get the private sector to "be the driver" of economic recovery, he said.

Goolsbee warned that that depressed housing market would continue because it is hard to recover quickly from what he called a 10-year bubble that inflated prices and sold too many houses to people who couldn't afford them.

"It's still going to take us time as a nation to work our way out of what was a 10-year-plus bubble," Goolsbee said.