NEW YORK (CNNMoney.com) -- President Bush said Friday that "it's clear our economy has slowed," hours after a government report showed a decline in payrolls for the second straight month.

But he said the long-term outlook is good, with a stimulus package enacted last month by Congress providing support for the economy.

"I know this is a difficult time for our economy," the president said. "But we recognized the problem early and we provided the economy with a booster shot."

Bush said the effects of the stimulus package are "just starting to kick in" and that the plan will "put money into the hands of American workers and businesses."

Earlier in the day, Bush's chief economic adviser Edward Lazear said that the nation's economy could contract in the current quarter. But he added that, "we expect that the economy will get stronger, primarily in the third quarter."

The statements come after the Labor Department said employers made their deepest cut in staffing in almost five years during February, highlighting concerns that a recession is imminent.

Senate Majority Leader Harry Reid, D-Nev., said in remarks made on the Senate floor that Americans are "burdened by an economy that is spiraling downward every day."

Reid noted that Bush does not think the economy is headed for a recession, but argues that the facts prove otherwise.

"This morning, all signs point in that direction," Reid said. "But regardless of what label we use, there is no doubt whatsoever that the American people are suffering."

Meanwhile, oil prices spiked to a record high above $106 a barrel Friday, raising concerns that higher gas prices will hurt consumers and increase inflation.

On Wall Street, stocks fell to their lowest level in nearly 18 months as recession fears continued to spook investors.