A collage of President Obama's 100 days in the White House.

President Barack Obama said on Wednesday night he wants to get the government out of the private sector as fast as possible -- but that as long as his administration is acting as a major shareholder for large sectors of American commerce, from cars to finance, he won't hesitate to shape decisions at those firms. The Federal Reserve following a two-day meeting of its rate-setting Federal Open Market Committee (FOMC) also said on Wednesday, the economic outlook had “improved modestly” and that the Fed would continue to pump tens of billions of dollars into the economy to keep credit flowing. To encourage this borrowing, and spending, interest rates controlled by the Fed would remain near zero, the policy makers said.

The American economy is shrinking at its steepest pace in 50 years, the government reported Wednesday, but a surprise rise in consumer spending since January and a fall in inventories, signalled that the worst of the recession might have passed.

Output fell at a 6.1% annual rate in the first quarter after declining at a rate of 6.3 percent in last year’s fourth quarter, according to the Commerce Department.

Finfacts Report: US GDP fell at an annual rate of 6.1% in the first quarter of 2009 following slump in Q4 2008 - - weakest six months since 1957-58

President Obama said at a news conference to mark his 100th day in office, on government involvement in the economy: "I don't think that we should micromanage." But he added that, in the name of protecting taxpayer dollars, the government would help troubled companies make"tough decisions based on realistic assumptions."

"Like any investor, the American taxpayer has the right to scrutinize what's being proposed," he said. "I don't know how to create [an] affordable, well-designed, plug-in hybrid, but I know that if the Japanese can...then doggone it, the American people should be able to do the same."

“I don’t want to run auto companies. I don’t want to run banks,” Obama said. “I’ve got two wars I’ve got to run already. I’ve got more than enough to do. So the sooner we can get out of that business, the better off we’re going to be.”

On the economy, the President said his administration had made progress but that there was much more to be done and that he ultimately wants a more stable economy less prone to boom and bust.

“We cannot go back to an economy that is built on a pile of sand — on inflated home prices and maxed-out credit cards, on overleveraged banks and outdated regulations that allowed the recklessness of a few to threaten the prosperity of us all,”the President said in opening remarks in the East Room of the White House.

He called his program a “new foundation for growth,” that would encompass increased spending on issues like education and renewable energy.

Earlier on Wednesday, the President was in Arnold, Missouri for a town hall meeting.

"Today marks 100 days since I took the oath of office to be your President. Now, back in November, some folks were surprised that we showed up in Springfield at the end of our campaign.  But then again, some folks were surprised that we even started our campaign in the first place.  (Laughter.)  They didn't give us much of a chance.  They didn't think we could do things differently.  They didn't know if this country was ready to move in a new direction.

But here's the thing -- my campaign wasn't born in Washington.  My campaign was rooted in neighborhoods just like this one, in towns and cities all across America; rooted in folks who work hard and look after their families and seek a brighter children -- future for their children and for their communities and for their country," he said.

President Barack Obama addresses a town hall meeting at Fox High School in Arnold, Missouri on April 29, 2009.

The Federal Reserve signaled it does not plan to ease up on its aggressive efforts to revive the financial system, even though it acknowledged that the intensity of the recession has eased in recent weeks.

The Fed said in a statement that it would push forward with plans to substantially increase its holdings of mortgage-backed securities and Treasury securities in the months ahead, and suggested it could increase those purchases if markets and the economy veer further off track.

The FOMC reiterated that it will keep its target for its key short-term interest rate -- the federal-funds rate at which banks lend to each other overnight -- near zero for an extended period.

"Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," the Fed said. It noted that household spending "has shown signs of stabilizing" while businesses have cut inventories, investment and staffing.

Paul Volcker, the former Fed chairman and now an economic adviser to President Obama, said on Wednesday on Bloomberg Television: “I’m not here to tell you the economy is going to recover very strongly in the short run,” but he said the improvement was sufficient to avoid a second government stimulus on top of the $787 billion in spending and tax breaks enacted in February.

FOMC Statement:

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.