"We confront a whole range of challenges ... all those problems are serious, they're daunting, but they're not insoluble.
"What is preventing us from tackling them and making more progress really has to do with our politics and our civic life. It has to do with the fact that ... our parties have moved further and further apart and it's harder and harder to find common ground because of money and politics.
"Special interests dominate the debates in Washington in ways that don't match up with what the broad majority of Americans feel.
"Because of changes in the media, we now have a situation in which everybody's listening to people who already agree with them and are further and further reinforcing their own realities to the neglect of a common reality that allows us to have a healthy debate and then try to find common ground and actually move solutions forward.
"What I said in 2004 that there were no red states or blue states there were United States of America, that was an aspirational comment. And it's one, by the way, that I still believe in the sense that when you talk to individuals one on one there's a lot more that people have in common than divides them.
"But obviously it's not true when it comes to our politics and civic life, and maybe more pernicious is the fact that people just aren't involved. They get cynical and they give up.
And as a consequence we have some of the lowest voting rates of any advanced democracy and low participation rates then translate into a further gap between who's governing us and what we believe."
Obama said his goal was to create path ways to help the next generation get involved.
"I want to work with them to knock down those barriers and to get this next generation to accelerate their move towards leadership, because if that happens I think we're going to be just fine and I end up being incredibly optimistic," he said.
Obama made no mention of Mr Trump during his appearance.
Obama has kept a low profile since leaving office, most noticeably making the news when he went kitesurfing in the Caribbean with billionaire Richard Branson.
He has reportedly spent part of his time off writing a book.