Bush Says Economy in Tough Time, But Will Rebound

President Bush faced a room full of movers and shakers on Friday, hoping to reassure them that his administration is doing all that is prudent to soften a downturn in the U.S. economy.

In a speech before the Economic Club of New York, the president acknowledged that the country "obviously is going through a tough time" but said he was confident of a rebound.

Bush said a proposal for state and local governments to buy abandoned and foreclosed homes would only help lenders instead of helping Americans stay in their homes. He said allowing bankruptcy courts to change mortgage terms would send the wrong signal to financial markets.

The president also said that the economy is flexible enough to weather the current downturn in the housing industry and other challenges and to get back on track.

"Our challenge is not to do anything foolish in the meantime," he said, referring to government actions aimed at stimulating the economy.

He cautioned against following those who believe "anything short of a massive government intervention in the market amounts to inaction."

The president's speech came amid evidence of an increasingly ailing economy. The dollar has fallen dramatically, oil and gold have hit record highs as jobs and retail sales are down.

Bush acknowledged that prices are up at the gas pump and grocery stores and housing values are down, causing worry to "hardworking Americans." But he said low unemployment

and strong productivity are proof of the economy's fundamentals are sound.

He said his administration would address the crisis "in a way that respects the ingenuity of the American people, that bolsters the entrepreneurial spirit, and ensures that when we make it through this rough patch, that the driving will be smooth."

The 101-year-old Economic Club of New York is an exclusive group of top executives. It's new chairman is Glen Hubbard, the first head of the White House Council of Economic Advisers for Bush.