Bush says economic 'panic' easing

The US president has suggested that Americans are starting to feel more positive about their economic future.

During a meeting with business leaders in Louisiana, George Bush said people's attitudes had changed from "near panic" to a "more relaxed" approach.

He put it down to the effects of the huge bail-out agreed with Congress to sustain the financial system.

Mr Bush was optimistic but warned there was a long way to go

Earlier, Federal Reserve chief Ben Bernanke said more government spending may be needed to combat the slowdown.

Although Mr Bernanke stopped short of saying the US was in recession, he said the American economy was likely to be weak for several quarters.

A fresh economic stimulus package "at this juncture seems appropriate", he told the US House of Representatives budget committee.

His comments were welcomed by Democratic leaders in Congress, who called on Republicans and the White House to work together to formulate a plan.

A White House spokesman said the Bush administration was "open" to a new package, depending on its make-up, and would seek guidance from others including Mr Bernanke.

'Serious consequences'

Mr Bush struck an optimistic tone while addressing the Central Louisiana Chamber of Commerce.

"I have heard that people's attitudes are beginning to change from a period of intense concerns - I would call it near panic - to being more relaxed," he said.

But he warned that there was "a long way to go".

A series of crises in the housing, credit and financial sectors have badly hit the US economy.

Many analysts are forecasting the US economy will shrink later this year and early next year. This would meet the classic definition of a recession - which is two quarters of negative growth.

However, some economists believe America is already in a recession, something that Mr Bernanke more than hinted at.

"We are in a very serious slowdown in the economy which has very serious consequences for the public. Whether it's called a recession or not is of no consequence," he said.

Any government spending would need to kick in quickly to encourage people and businesses to boost spending and help the economy during the period in which economic activity would be otherwise weak, he said.

The Federal Reserve chairman also said the package should include provisions that would aid the jammed credit markets, which has been a major factor in the economy's slowdown.