Obama Cites "Positive Trend" in Economic Growth as Earthquake Fallout Looms

March 11, 2011 — -- The United States will not tap the U.S. Strategic Petroleum Reserve, President Obama said today, despite predictions by some economists and analysts that the devastating earthquake and tsunami in Japan will affect financial markets around the globe.

"Right now, we're not seeing a shortage of supply," the president said at his news conference in Washington, D.C.

The petroleum reserve is intended for "a severe disruption in supply," he said, but refineries are operating at a "fairly" full capacity.

Looking ahead, he said, if the United States wants to "secure our long-term prosperity," beyond increased domestic production, it must "gradually reduce demand" for oil.

"We are encouraging offshore exploration and production," he said. "We're just doing it responsibly."

Obama also said there has been a "positive trend" in U.S. economic growth, including a drop in the unemployment rate.

The president said he was heartbroken about the tragedy in Japan but confident that the Japanese would rebuild.

Meanwhile, his director of the White House National Economic Council offered his analysis.

"This is clearly going to add complexity to Japan's challenge of economic recovery," although it might also help by adding to its gross domestic product, Lawrence Summers said on CNBC this morning.

"It may lead to some temporary increments ironically to GDP as a process of rebuilding takes place," Summers said. "In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength," referring to the 1995 quake that killed more than 6,000 people.

A number of companies have reported some damage to their facilities in the region. Sony reportedly has halted production in six factories in the cities of Fukushima and Miyagiall and has evacuated most employees, according to Reuters.

Tire company Bridgestone, camera maker Canon and Citigroup Holdings Japan reportedly have not faced major damage to their facilities in the region, Reuters reported.

"This is a tragedy at this particular point Japan did not need," Summers said, referring to the fragile state of the Japanese economy.

The Japanese GDP contracted 1.3 percent from October to December, according to Bloomberg News earlier this week.