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Obama tempers hope for economy
Question of the Day
President Obama’s campaign slogan, “Yes we can,” is becoming more like “Yes we can, but it will take awhile” when it comes to the economy.
A rash of gloomy economic reports Thursday demonstrated why his administration has been working to dampen expectations for a quick economic recovery.
Microsoft Corp. announced 5,000 layoffs — the first mass layoffs in its history — and the government last week recorded the highest one-week tally of new unemployment claims in 26 years.
Housing starts, meanwhile, fell nearly 16 percent in December to an annual rate of 550,000 units, the lowest number since the Commerce Department started tracking the statistic 50 years ago.
Mr. Obama and his aides want the public to understand that the grim picture is not going to brighten any time soon. They have said repeatedly that they expect 2009 to be a tough year, even as they call for quick action on an $800 billion economic stimulus bill.
That legislation, they say, would create or restore 3 million jobs, exceeding the 2.6 million jobs that were lost last year.
Restoring growth and confidence “will take time,” Timothy Geithner, Mr. Obama’s pick to be Treasury secretary, told the Senate Finance Committee earlier this week. “It will require action on a scale that we have not seen in generations.”
Economists say the administration’s caution reflects a steep and long-lasting recession that likely will not let up until the end of 2009. Even when growth is restored, history shows, job creation can remain elusive for months or even years.
After the past two recessions officially ended in 1991 and 2001, it took 12 months and 21 months, respectively, for the economy to start creating jobs again. Those were widely derided as “jobless recoveries.”
The latest economic data suggest a repeat of that scenario or worse.
Conditions in housing and finance — the epicenters of the recession — are the worst since the Great Depression. Major banks are teetering on the brink of insolvency, and major stock indexes have lost 40 percent or more of their value.
“The American people understand that things are likely to get worse before they get better,” White House spokesman Robert Gibbs said Thursday, while announcing that Mr. Obama is scheduling daily staff briefings on the economy as well as national security. “But I think that they can be reasonably assured that he’s working hard every day to get the economy moving again as quickly as possible.”
Sung Won Sohn, an economics professor at California State University at Channel Islands, said a big part of Mr. Obama’s job will be managing public expectations.
“Understandably, Americans want the president to announce measures to end the economic difficulties as soon as possible. Unfortunately, there is no silver bullet to end economic ills in a hurry,” he said. “High expectations tend to lead to large disappointments.”
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