Bush reassures over economic woes

Speaking at the Economic Club of New York the President acknowledged that growth had slowed but said that the economy is basically sound.

He said the economy was "obviously going through a tough time".

Meanwhile, Ben Bernanke, the head of the US central bank pledged to do everything possible to help struggling homeowners hit by the credit crisis.

He said that the Fed "is strongly committed to fully employing our authority, expertise, and resources to help alleviate their distress".

The Fed has already cut interest rates sharply to ease the credit crunch, and is expected to make a further reduction when it meets next week.

Housing problems

The US housing market is in freefall, with prices dropping and repossessions rising.

The remarks came shortly after one of Wall Street's leading investment banks, Bear Stearns, said it needed emergency funding due to the credit crisis.

The president said that the Bear Stearns situation was changing fast, but the US Federal Reserve and the US Treasury had the situation in hand.

He also admitted that the credit crisis is having a knock-on effect to the broader economy by making banks less able to lend money.

"Hard-working Americans are concerned about their families and their bills," the president said.

Consumer confidence slips

That was supported by the latest report on US consumer confidence from the University of Michigan.

Its index of confidence slipped in early March compared to February to near record lows.

"There was nearly unanimous agreement among consumers that the economy was now in recession," said Richard Curtin, director of the survey.

President Bush said that tax rebates agreed with Congress would start taking effect later this year, which should help boost the economy.

A survey of economists by Reuters also suggested that a majority are now predicting that the US economy had moved into recession.