Economy is Bouncing Back, Bush Says

President Bush declared Monday that the U.S. economy is “fundamentally strong” and is poised for growth, his latest response to public worries spawned by corporate scandals and slumping financial markets.

“There is a better day--right around the corner for all Americans,” Bush told several hundred people who filled the Performing Arts Center at the University of Alabama’s Birmingham campus. “I’m very optimistic about our economy.”

He recited a list of indicators to justify his position, such as a low inflation rate, reasonable interest rates, rising productivity, relatively strong retail sales and what Bush termed his administration’s sound monetary policy.

Wall Street, though, provided ample evidence of the jittery economic mood, as the Dow Jones industrial average plunged by more than 400 points Monday before rallying late in the session to post only a modest decline.

The market’s erratic day also fueled the increasingly insistent argument by Democrats that Bush is failing to adequately respond to economic instability and insecurity.

“He’s never really demonstrated in these speeches a grasp of the reality of the situation,” said Sen. Jack Reed (D-R.I.), chairman of Congress’ Joint Economic Committee. “All you’re getting is the hortatory expressions that everything is fine.”

Bush referred to the market gyrations as a result of “the economic binge we just went through” in the 1990s.

“There was endless profit, there was no tomorrow when it came to

White House Press Secretary Ari Fleischer, in comments to reporters, also sought to cast the volatile markets as an aberration rather than a sign of long-term problems.

“After large periods of growth come corrections--that’s part of the private cycle of the market. People have seen that come and go before,” Fleischer said. “Markets take care of themselves.”

Last week, the Dow dropped by almost 700 points.

And concern within the White House clearly is growing about the potential political fallout of the shaky economic picture. Bush now plans to devote much of his summer to the issue, focusing on it during several events and trips even as he vacations in August at his Texas ranch.

In striking an upbeat note Monday, Bush broke no new policy ground. Instead, he stressed what Fleischer called “the strength of the economy” and the administration’s efforts “to keep the economy moving in the right direction.”

Said Bush: “This economy ... has got foundations for growth so the people who want to find work can find work, so that the entrepreneurs in America can flourish.”

Serving as a backdrop for the president’s speech was a huge red-white-and-blue collage bearing the phrase “Strengthening Our Economy” 34 times.

His speech followed by just six days his much-publicized address on Wall Street concerning the series of bookkeeping scandals that have rocked corporate America. Bush spoke out strongly against corporate fraud, but the speech was widely panned because he proposed few policy initiatives to crack down on such behavior.

Democrats continued those attacks Monday. Said party national Chairman Terry McAuliffe: “Let’s face it, President Bush cannot solve this crisis of confidence by giving the markets a pep talk. It’s going to take real economic leadership--leadership that has been sorely lacking to date.”

Bush on Monday acknowledged that greater consumer and investor confidence is a vital ingredient to economic recovery--and that it could use a boost.

He pledged “to continue to work in Washington to build confidence, to build ... the strong foundations for economic vitality that exist, to build on the good statistics we’re beginning to see.”

Another part of this confidence-building effort, he said, is to ensure “the highest ethical standards in corporate America.”

Striking much the tone that marked his Wall Street speech, Bush said: “It is important for corporate America to hear this call ... in order to be a responsible American, you must behave responsibly. We expect there to be full disclosure of assets and liabilities. We expect there to be fair accounting practices. We expect you to treat your investors and employees with the respect they deserve. And if not, we intend to do something about it at the federal level.”

After reciting the proposals he outlined last week, the president called on Congress to deliver to him by its August recess the accounting reform legislation that passed the Senate on Monday. That bill must now be reconciled with a less stringent version the House approved.

Bush also reiterated his conviction that the vast majority of business executives are morally upright citizens. “A few have damaged the reputation of the many,” Bush said.

After his speech, Bush spoke at a $4-million fund-raising luncheon for Rep. Bob Riley (R-Ala.), who is running for governor against Democratic incumbent Donald Siegelman.

With 36 governorships being contested in November--and 23 of them held now by the GOP--Democrats are all but certain to narrow the Republican advantage nationwide.

Currently, the GOP holds 27 governorships, compared with 21 occupied by Democrats and two by independents.

But Alabama offers the GOP perhaps its best chance of defeating a sitting Democrat, according to political analyst Charles Cook. Siegelman, a first-termer, has been dogged by charges of cronyism in awarding state contracts and, like many governors, by a severe budget crunch.

Bush’s trip to Alabama launched a busy travel week. He will host the president of Poland for a state visit on Wednesday, and then accompany him Thursday for two appearances near Detroit. On Friday, Bush is scheduled to speak to U.S. troops at Ft. Drum, N.Y.

Times staff writer Janet Hook in Washington contributed to this report.