The shaky U.S. economy, facing stubbornly high unemployment and volatile oil prices, is one of the main worries facing General Motors Co, according to the head of the largest U.S. automaker.

Adding to his concerns is the current politically charged battle in Washington over whether to raise the limit on government borrowing or risk a default on the nation's rising long-term deficits.

There's a lot of uncertainty about a jobless recovery, how strong is the recovery going to be? There's a lot of concern about oil prices, Chief Executive Daniel Akerson said on Tuesday at GM's first shareholder meeting since emerging from bankruptcy in 2009.

This company, more than any other I have been associated with, is more closely tied to the gross domestic product.

Economists and government officials have called recent U.S. economic reports on economic activity and employment disappointing, raising concerns that the nation may be sliding back toward recession.

NO TIME TO 'PLAY CHICKEN'

Akerson said the United States urgently needs to tackle the issue of its rising deficit. President Barack Obama's Democratic Party and the opposition Republicans are locked in a standoff over whether to raise the limit on government borrowing, which currently stands at $14.3 trillion.

If they fail to do so by August 2, the nation would be at risk of defaulting on its debts.

That would shake the credit markets tremendously, said Akerson, who joined the company from private equity firm Carlyle Group. We shouldn't underestimate that and play chicken with our national credit rating, our national honor.

GM emerged from bankruptcy with help from U.S. funding and the government still owns a 32 percent stake in the company.

Some investors see the government's continued stake in the company as an overhang on the shares, which have lost some 22.5 percent of value so far this year, at a time when the broad Standard & Poor's 500 index is up 2 percent.

Akerson said the board would make no decision to buy back shares -- which could boost the stock price -- until the government decides its plans for its stake. Sources told Reuters last month that the Treasury Department plans to hold its shares until at least August.

The primary driver of any further balance sheet activities will, I think, in the near term be driven by the government's decision of when or when they will not exit the company, Akerson said.

NO 'VICTORY LAP'

U.S. automakers have been the nation's first major industry to show evidence that the economy may be slowing again after a tepid recovery from a brutal recession.

GM's U.S. auto sales in May fell short of analysts' expectations, as higher prices and lower incentives by the company and many of its larger rivals led consumers to put off purchases in the face of a weakening economy.

Industry-wide, May sales fell 3.7 percent from last year to an annualized rate of 11.8 million. That fell far short of the 12.6 million expected by a Reuters poll of economists and was the lowest rate since September 2010.

No one is doing a victory lap, Akerson said, flanked by two new GM cars -- the Buick Verano and Chevrolet Sonic. We have a lot to do.

The company aims to increase manufacturing of its high-end Cadillac vehicles overseas in the next 18 to 24 months to strengthen that luxury brand outside the United States, he said, without providing further details.

GM currently builds a small number of Cadillacs in a joint venture in China and sells it in European and Asian markets.

GM's shares rose 28 cents, or nearly 1 percent, to $28.84 in morning trading on the New York Stock Exchange.

Investors will also get a deeper look into rival Ford Motor Co later on Tuesday when that company's management meets with analysts to lay out their long-term growth strategies, particularly for emerging markets.

Akerson acknowledged that the company still faces many challenges.

We've strung five consecutive quarters of profitability together, but no one said this was going to be a lay-up, he said. There's a lot of work to be done over the next couple of years, not only at General Motors but throughout the industry.

(Reporting by Ben Klayman, additional reporting by Deepa Seetharaman; Writing by Scott Malone; Editing by Maureen Bavdek)

China Barack obama General motors