Despite Monday’s sharp drop in U.S. stock markets, the White House insisted that the U.S. economy would remain resilient to China’s economic volatility.
The Dow Jones Industrial average plunged more than 5 percent Monday amid global fears of China’s economic slowdown. It later staged a comeback, but by mid-afternoon was down 400 points.
White House spokesman Josh Earnest, however, said the U.S. economy is stable and resilient enough to handle skittishness in China.
“There’s no doubt that the global economy is more inter-connected than it’s every been,” Earnest said. “But what I would encourage people to evaluate is the ongoing resilience of the U.S. economy.”
The U.S. economy, he said, has added 13 million jobs during the president’s time in office and unemployment is at 5.3 percent, the lowest level in seven years.
“Those two measures of economic growth,” he said, “are in an indication of how durable the U.S. economy continues to be.”
He declined to speculate on how the drop in stock prices would impact the Federal Reserve’s upcoming decision whether to raise interest rates. “That is the responsibility of an independent Federal Reserve,” he said.
He was less cautious in warning Congress to be mindful of the global market turmoil.
When it comes to the budget showdown expected between Republicans and Democrats on Capitol Hill this fall, he said it would be a “very bad time for a self-inflicted wound.”
“That’s why we continue to make the case to Congress,” that it needs to pass a budget on time that reverses the sequester and avoids a government shutdown.
He also urged Congress to take the “overdue” step of reauthorizing the Export-Import Bank and increase investment in the nation’s transportation infrastructure.
“We would like to see Congress take the kind of common sense steps to build on that momentum that the U.S. economy continues to enjoy,” he said.
China’s President Xi Jinping will meet with Obama in September on his first state visit to the White House.
Earnest said Obama plans to press Xi to make market-determined reforms to his economy and to stop cyber-espionage that many believe is emanating out of China.
Earnest didn’t mention the recently U.S.-government acknowledged hack into tens of millions of U.S. government personnel records exerts often attribute to China.
