(For other news from the Reuters Washington Summit, click on http://www.reuters.com/summit/Washington10?pid=500)
* American voters are angry and anxious about the economy
* Republicans look to win control of House, perhaps Senate
* Jobs must be the focus, McCain tells Reuters summit
* Shelby sees gridlock as "not all bad"
* Obama: "We're moving in the right direction"
By John O'Callaghan
WASHINGTON, Sept 20 (Reuters) - Political gridlock looks inevitable with a Republican resurgence in the U.S. congressional election in November but compromise is possible in one area -- cutting spending and the massive budget deficit, speakers told the Reuters Washington Summit on Monday.
The longest U.S. downturn since the Great Depression of the 1930s ended last year, in June 2009 to be exact, according to the National Bureau of Economic Research on Monday.
But that is cold comfort for ordinary Americans worried about their jobs and their futures, making the economy and its slow recovery the overriding issue for voters.
Republicans have tried to block President Barack Obama at almost every turn since he took office in January 2009 and, despite some key victories, his Democrats have little hope of reversing the reality of big losses in the Nov. 2 election.
"They hold the Senate. They lose the House," said Clifford Young, managing director of public sector practice at Ipsos, a global research company that does polling for Reuters.
Ipsos models predict a 50-seat gain for Republicans in the 435-seat House of Representatives , giving them a majority, and a six-seat gain in the Senate, weakening the Democratic majority to 53-47.
Young saw the possibility of common ground on how to cut an annual deficit projected to balloon to $1.47 trillion due to huge amounts of government spending to boost the economy.
Compromise elsewhere looks unlikely, he said, with the 2012 presidential election in sight and the two sides "further from the middle" than in the 1990s when Democratic President Bill Clinton achieved welfare reform with a Republican-run House.
Energy and climate change legislation, in particular, could suffer from political gridlock.
"It's all about jobs, jobs, jobs and the economy," John McCain, a veteran Republican senator who ran against Obama for president in 2008, told the summit.
Once Republicans pick up seats, he said, Obama should sit down to discuss fundamental differences between the two parties. McCain saw room for some agreement on cutting spending and tackling the deficit but said the onus was on Obama, expressing concerns about the president's track record so far.
"There's never been a serious negotiation with this administration about any issue that I know of," he said.
"GRIDLOCK'S NOT ALL BAD"
The president, speaking to a televised "town hall" meeting on Monday, again stressed his administration's progress on the economic front, but acknowledged many still face tough times.
"Even though economists may say the recession officially ended last year, obviously for the millions of people who are still out of work ... it is still very real," Obama said.
"My goal here is not to try to convince you that everything is where it needs to be. It's not," he said. "But what I am saying is ... that we're moving in the right direction."
Obama has played a prominent international role during the financial crisis, Middle East peace talks, and nuclear tensions with Iran and North Korea, and has ended U.S. combat operations in Iraq and pledged to start leaving Afghanistan next year.
But in this election, domestic issues are taking center stage.
Beyond jobs, Americans are anxious about their mortgages and house values, the cost of health care and paying the bills. That sense of insecurity has hurt Obama and Democrats with the recovery uneven and unemployment sticking near 10 percent.
Obama "has to be seen as doing something but it's not going to have any impact" by November, Young said.
"People have to feel objective improvements in their lives and they're not seeing that," he said. "People are going to vote their pocketbooks."
Republican leaders in the House plan to announce their long-awaited "governing agenda" on Thursday focused on job creation and reducing government spending, aides said.
With Republicans likely to be in control of the House and stronger in the Senate, it will be harder for Obama to push the kinds of ambitious reforms to the healthcare system and Wall Street practices that marked his first two years in office.
"Gridlock's not all bad. I think it's how you look at it," Richard Shelby, the senior Republican on the Senate Banking Committee, told the Reuters summit, citing the need "to slow things down" and "not do things on a whim."
"Maybe they would want to work with us on some issues, maybe not," he said of the Obama administration.
Shelby saw Republicans picking up seven to eight seats in the Senate but "hopefully 10." (Additional reporting by Steve Holland, Karey Wutkowski, Alister Bull and Caren Bohan; Editing by Leslie Adler)