KANSAS CITY, Mo. -- President Bush, facing growing concerns and criticism about the economy, expressed optimism Thursday that the country is heading in the right direction -- toward "greater prosperity and more jobs."

Expressing sympathy for unemployed workers, Bush said, "The recession was hard on a lot of Americans." He added that many people were helped by the tax cuts he pushed through Congress.

"Had we not taken action," the president said, "this economy would have been in a deeper recession. It would have been longer, and as many as 1.5 million Americans who went to work this morning would have been out of a job. Instead, because we did act, the recession was one of the shallowest in modern economic history."

Bush's upbeat message was intended to ease anxiety among voters and answer Democratic presidential candidates who accuse the president of breaking his promise to create jobs. Under his administration the nation has suffered a net loss of 2.7 million jobs; polls show the economy is the No. 1 issue on voters' minds.

"America's economy today is showing signs of promise," the president told a cheering audience of 2,500 businesspeople at the Kansas City Convention Center.

"We're emerging from a period of national challenge and economic uncertainty," he said.

While the president got an enthusiastic reception inside, hundreds of demonstrators stood behind police barricades outside to protest his economic record and the war in Iraq. "Bush lies, soldiers die," one sign said. "Who's recovery. I just got laid off," another sign read.

President's six steps

Bush outlined six steps that he said would build confidence among employers and strengthen the economy. They ranged from health-care measures, streamlined regulations and restrictions on medical lawsuits to a comprehensive energy plan, expanded trade and tax breaks.

He challenged Congress to make recently enacted tax cuts permanent rather than let them expire on schedule. "When we threw out the old taxes, Americans didn't expect to see them sneaking in through the back door," Bush said.

He blamed the expiration of some tax breaks, like the estate tax which is to disappear in 2010 and return in 2011, on "a quirk in Senate rules."

He reminded business leaders that capital gains tax reductions will rise by a third in 2008, incentives aimed at small businesses will disappear in 2006 and a $1,000 child credit will slide back to $700 at the end of next year.

The Congress "must make these tax cuts permanent," Bush said.

The Midwest is crucial to Bush's re-election strategy and his trip here marked his 13th visit to Missouri. The only states he has visited more frequently are Florida and Pennsylvania. Bush won Missouri's 11 electoral votes by fewer than 79,000 votes in 2000.

Unemployment in Missouri was 4.3 percent when Bush took office in January 2001 and now is 5.6 percent -- lower than the national average of 6.2 percent. Missouri suffered the largest employment decrease of any state from June to July, down 39,600 jobs, according to the Bureau of Labor Statistics.

Cause for deficits

Turning to budget deficits that have soared during his presidency, Bush blamed them on war and recession.

Wrapping the problem in patriotic terms, Bush said, "My attitude is, any time we put one of our soldiers in harm's way, we're going to spend whatever is necessary to make sure they have the best training, the best support and the best possible equipment."

Bush usually speaks for a half hour or less but he went on for 42 minutes, detailing what he described as the benefits of tax cuts and other steps to stabilize the economy.

"Our economy is starting to grow again," he said.

"Americans are feeling more confident. I am determined to work with the United States Congress to turn these hopeful signs into lasting growth and greater prosperity and more jobs."

Bush said the economy had been hurt by the recession, the terrorist strikes of Sept. 11, 2001, corporate scandals and the war in Iraq

"The march to war is not conducive for hopeful investment," Bush said.

"Our military campaigns and the war on terror have cost our treasury and our economy," Bush said, "Yet they have prevented greater costs."