U.S. President Barack Obama today assured the world that despite tough economic times the American economy will recover.
"What I want the American people and our partners around the world to know is this: We are going to get through this," he said. "Things will get better, and we are going to get there together."
Obama was speaking hours after the U.S. Labor Department issued a rare bit of good news. The U.S. economy, it said, generated a higher-than-expected 117,000 jobs in July, slightly reducing the unemployment rate to 9.1 percent.
The department also revised upward the jobs data for the previous two months, which had originally raised concerns that the economy had flat-lined.
The spot of good news from Washington, however, was not able to offset another day of losses in world markets.
Investor confidence has been shattered by worries that the United States may be heading toward another recession and is struggling to control its spiraling debt.
Fears are also mounting that the EU may be forced to bail out debt-laden Italy and Spain.
After a short-lived rally, Europe's main stock markets in London and Frankfurt had fallen again by the close of trading and Paris’s CAC-40 slid for a record 10th straight day.
Major Asian markets in Tokyo, Hong Kong, and Shanghai also closed down.
Worst Drop In Two Years
The continued losses come one day after the U.S. stock market suffered its worst drop in more than two years.
According to Reuters, some $2.5 trillion were wiped off the value of world stocks this week.
Speaking today in Brussels before the close of trading, Olli Rehn, the European commissioner for economic and monetary affairs, suggested that markets had overreacted to concern about Italy and Spain.
By the end of today’s trading, the markets in the two countries outperformed their peers in Europe despite falling.
But Rehn acknowledged that eurozone countries needed to move more urgently to put in place financial measures agreed by the bloc last month.
"While the 21st of July agreement is a milestone in our management of the sovereign debt crisis, we have had difficulties in communicating the agreement to the markets and to the citizens," he said.
In a letter to EU leaders on August 4, Commission President Jose Manuel Barroso expressed alarm over the mounting crisis and called on individual countries to move with haste to ratify the legislation needed to strengthen the EU's debt-relief strategy.
The leaders of the eurozone's economic powerhouses, Germany and France, are holding talks on the looming debt crisis. The telephone conference between Angela Merkel and Nicolas Sarkozy is also expected to include Spanish Prime Minister Jose Luis Rodriguez Zapatero.
The leaders of Europe's economic powerhouses, Germany and France, were to hold talks on August 5 on the looming debt crisis.
The telephone conference between Chancellor Angela Merkel and President Nicolas Sarkozy could reportedly also include Spanish Prime Minister Jose Luis Rodriguez Zapatero.
Calls For Action
It comes a day after Barroso expressed alarm over the mounting crisis and called on the 17 leaders of the eurozone to move quickly to strengthen the EU's debt-relief strategy.
Other countries this week took steps to weaken national currencies, which have surged as global investors seek a safe alternative to the euro and the U.S. dollar. Both Japan and Switzerland put measures in place to stem the rise of their currencies, which was hurting their economies by making exports uncompetitive.
Officials in Asia have called for greater coordination worldwide to prevent the U.S. and European crises from sinking the global economy.
Japan's Economy Minister Kaoru Yosano said it was critical for economic policymakers to work together. "The entire world is connected through finance, so what happens in New York or London doesn't just happen there," Yosano said. "So it is important that we keep all financial markets in mind."
Chinese Foreign Minister Yang Jiechi, speaking on August 5 during a visit to Poland, called on the United States to adopt "responsible" monetary policies to protect the dollar investments of other nations.
The U.S. Federal Reserve will hold its next policy meeting on August 9. But economists say there is little it can do to spur growth.
Amid the bleak outlook, Wall Street experienced an historic slide on Thursday (August 4). The U.S. stock market suffered its worst day since the financial crisis in the fall of 2008, with the Dow Jones industrial average falling more than 500 points.
That prompted one financial analysis firm, IHS Global Insight, to put the chances of another U.S. recession at 40 percent.
written by Daisy Sindelar and Richard Solash, with agency reports