CHICAGO (AP) – President Bush said Monday that economic indicators are “increasingly mixed,” causing anxiety for many Americans. But he said the economy is resilient and the U.S. has dealt with anxiety before.

Bush said it was important, in a time of economic uncertainty, to send a signal that taxes will remain low.

“A lot of Americans are anxious about the economy,” the president told business leaders in Chicago. “This frankly is not unprecedented,” he said, pointing to the recession in the early months of his administration, terrorist attacks, corporate scandals, wars in Iraq and Afghanistan and natural disasters.

“In seven years we’ve had experience in dealing with anxiety,” Bush said.

Bush scheduled the speech to try to calm fears that his administration would stand by and let the economy slip downward or that a recession is inevitable.

“We’ve had experience in dealing with anxiety. Every time, our economy has absorbed those shocks” and dealt with them, he said to a gathering organized by the Illinois Chamber of Commerce.

Rep. Rahm Emanuel, D-Ill., was among those who greeted Bush at the event. Afterwards, he said in a statement that he was pleased to welcome the president to Chicago but that, “even as the White House continues to claim the economy is “sound,’ American families know the truth – under President Bush, the middle class is what has been left behind as the economy has stalled.” Emanuel is chairman of the House Democratic Caucus.

The president spoke after having lunch with Chicago business leaders at the stately, art-filled Union League Club of Chicago, a private club in the heart of the city’s financial district.

His newly sober commentary on the economy reflected a consensus among advisers that Bush needed to acknowledge the economy’s shaky performance of late, rather than only tout its strengths, in order to inspire confidence in both his administration and the economy’s resilience.

“Recent economic indications have become increasingly mixed,” he said.

He argued that this bolsters the need to make all the tax cuts passed during his presidency permanent.

“A mixed report only reinforces the need for sound policies in Washington, which do not create more regulation and more lawsuits,” Bush said. “We don’t need more uncertainty in an uncertain market.”

He made no mention of the fact that he and his advisers have been discussing whether a short-term stimulus package may be necessary.

White House spokesman Tony Fratto said Bush wants more time and more information before making a final decision about what, if anything to do. But Fratto said Bush regards his State of the Union address to Congress at the end of the month and the release of his new budget proposal shortly after as a sort of deadline for making that call.

“He wants to look at the data. He hasn’t made a final decision,” Fratto said. He wouldn’t comment on the White House view of any of the stimulus ideas that have been floating around, nor would he say with whom the White House is consulting as it examines the situation.

The Congressional Budget Office said Monday that the federal budget deficit had inched up in the first quarter of the current fiscal year, as growth in tax revenues slowed along with the softening economy. The budget deficit is $27 billion higher after the first three months of the 2008 budget year, which began Oct. 1, than it was after a comparable period for 2007, CBO said.

On Capitol Hill, Democrats signaled they are leaning toward developing a legislative package aimed at stimulating the economy. House Speaker Nancy Pelosi, D-Calif., has asked senior lawmakers, including top tax writer Rep. Charles Rangel, D-N.Y., to examine options.

“We will propose pro-middle-class, pro-growth, and pro-job creation initiatives that ensure our economy works for all Americans, not just the privileged few,” Pelosi said in a statement.

Aides cautioned no firm decision has been made to go forward. For starters, any decision to use deficit-financed tax cuts to stimulate the economy would run into opposition from deficit hawks in the party.

AP-ES-01-07-08 1814EST