"Markets will go up and down, but the underlying challenges have held steady for too long. We have an education system that is failing too many of our kids," Obama said at a Democratic party event in Washington.
"If we don't fix that, then we're not going to be able to compete with China or India or Brazil, who are very hungry and know that whichever country has the best workforce, the most highly skilled workforce, is going to be the country that succeeds economically," he said.
Obama said as a result of the steps taken by his administration, they have had 17 months now of consecutive private sector job growth.
Corporate profits have been up. The credit markets have stabilized, he said.
"But what's absolutely true even before these last couple days in the stock market is that recovery wasn't happening fast enough, and some of the headwinds that we've been dealing with are ones that are going to take some time to fix," he said.
"The truth of the matter is that we now live in a global economy where everything is interconnected, and that means when you have problems in Europe and in Spain and in Italy and in Greece, those problems wash over into our shores," he said.
"We have competition from China and India and Brazil, places that most folks didn't think of in economic terms 30 or 40 years ago as competitors of the US and now they're competing and they're producing more engineers and they're producing more scientists.
They are ready to steal market share, or at least win market share, from our companies, if we're not careful," said the US President.
"For all the progress that we've made over the last two- and-a-half years -- and that progress has been extraordinarily significant, not only health care reform but financial regulatory reform, making sure that we are starting to transform our education system with things like Race to the Top.
"Which says we're going to give more money to schools but we expect reform in exchange for more money; despite the transformations that have taken place in our foreign policy, where we are -- we have now ended the war in Iraq and we are transitioning into a posture where in Afghanistan, Afghans can take responsibility for their own security -- despite all those changes, we've got a lot of unfinished business," he said.