Obama: The worst may be behind us

BEN FELLER, Associated Press Writer

WASHINGTON (AP) -- President Barack Obama on Friday welcomed a dip in unemployment as evidence "the worst may be behind us" with the recession well into its second year.

Earlier, however, the White House said that the president still expects unemployment to hit 10 percent sometime later this year.

White House press secretary Robert Gibbs said the two positions don't contradict each other.

"I would describe the report that came out today as the least bad report that we've had in a year," Gibbs said. "But we still have a long way to go."

The new Labor Department numbers show that employers cut 247,000 jobs in July, another job loss but also the smallest reduction of any month this year. The unemployment rate dropped marginally from 9.5 percent to 9.4 percent, although one of the reasons for that change is that hundreds of thousands of people left the labor force.

"Today, we're pointed in the right direction," Obama said in brief remarks in the Rose Garden hours after the report was released. "While we've rescued our economy from catastrophe, we've also begun to build a new foundation for growth."

Even so, Obama said: "We have a lot further to go. As far as I'm concerned, we will not have a true recovery until we stop losing jobs." He also said he won't rest until "every American that is looking for a job can find one."

The president used the new jobs figures not only to pitch the benefits of the already passed stimulus package but also to press for policy changes on health care, education and energy that he seeks.

"We can't afford to return an economy based on inflated returns and maxed-out credit cards," he added. "It won't be easy. ... We have a steep mountain to climb and we started in a very deep valley." But he added that he was confident the country could pull itself out of the slump.

The initial White House reaction to the new employment numbers was mostly guarded.

"None of us loses sight of the fact that last month a quarter million people lost their jobs," Gibbs said. "The long-term unemployment rate is increasing. People are going to begin exhausting their even extended unemployment benefits soon."

"I think it's going to be quite some time before we start seeing genuine, sustained, positive job growth," the spokesman said.

Obama has urged Americans to be patient and give time for his $787 billion stimulus package of tax cuts and increased government spending to take hold. Gibbs contended there could be no doubt the stimulus plan has contributed to the slowing rate of job losses.