President Obama said yesterday that he could detect bright "signs of economic progress" on a dark horizon while warning that there was "much more work to be done" before America was safe from the storm that has thrown millions out of jobs and homes.

“There is no doubt that times are still tough,” he said. “But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past.”

His speech to Georgetown University in Washington yesterday was designed to demonstrate that the economy remains the Administration’s first priority even as he prepares to head off on more foreign travels tomorrow to Mexico and Trinidad.

Rejecting criticism that he had been spending with “reckless abandon”, Mr Obama said: “History has shown repeatedly that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months - years of low growth, years of low job creation, years of low investment, all of which cost these nations far more than a course of bold, upfront action.”

He insisted that his $787 billion stimulus plan, as well as efforts to strengthen the banking system and rescue the American car industry were beginning to bear fruit with an increase in mortgage refinancings or more lending by small businesses.

“This is all welcome and encouraging news,” said Mr Obama, but 2009 will continue to be a difficult year with “more job loss, more foreclosures and more pain before it ends”.

Ben Bernanke, Chairman of the US Federal Reserve, also offered a “fundamentally optimistic” assessment today, using a speech in Atlanta to highlight recent data on home sales and consumer spending as “tentative signs that the sharp decline in economic activity may be slowing”.

He said: “A levelling out of economic activity is the first step toward recovery.”

The need for caution, however, was underlined by new figures published today showing US retail sales had fallen by 1.1 per cent in March while purchases of cars and other vehicles tumbled by 2.3 per cent. Overall spending remains 10 per cent down from a peak reached last June.

US bank shares slumped, dragging down the New York York stock market which grew jittery over a spate of impending results from leading American financial institutions over the next two weeks.

The markets were nervous despite Goldman Sachs, the blue-chip investment bank, reporting a strong first quarter and unveiling a surprise promise to repay its $10 billion government loan.

Investors held out little hope, however, that other banks will be able to replicate such success.

Mr Obama said: “By no means are we out of the woods just yet.” But he urged his country to take a long term view, adding: “When a crisis hits, there is all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furore has died down and the media coverage has moved on to something else, instead of confronting the major challenges that will shape our future in a sustained and focused way.”

Recognising the concerns of voters, he said: “I know that some have accused us of taking on too much at once. Others believe we haven’t done enough. And many Americans are simply wondering how all of our different programs and policies fit together.”

The President said the task was to ensure this “crisis never happens again”. Invoking Christ’s Sermon on the Mount, Mr Obama said that the economy could not be rebuilt on a “pile of sand” but on investment in clean energy, education and health care.

“We must build our house upon a rock. We must lay a new foundation for growth and prosperity a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad,” he said.

“We will not finish it in one year, we will not finish it in many,” he added, “but if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand.”

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