As Americans get more fidgety about an ailing economy, President-elect Barack Obama sought to reassure the nation and nervous holiday shoppers as beleaguered stores braced for their most important month of the year.
“Help is on the way,” he proclaimed at his third news briefing on the economy this week. Fifty-five days away from taking office, he declared he would have an economic plan ready for action “starting day one.”
Investors’ improved spirits kept pace. The Dow Jones industrials climbed 247 points, marking the first time since last spring that the average had risen for four straight sessions.
To help with ideas from outside the White House, Obama announced he was forming a new team of advisers with former Federal Reserve Chairman Paul Volcker as the head.
“There is no doubt that during tough economic times family budgets are going to be pinched,” Obama said. “I think it is important for the American people, though, to have confidence that we’ve gone through recessions before, we’ve gone through difficult times before, that my administration intends to get this economy back on track.”
This reassurance is crucial as the holiday shopping season gets under way, with deep discounts already in place as stores try to lure buyers who are worried about their jobs and homes.
Volcker, 81, will head the President’s Economic Recovery Advisory Board. The board’s top staff official will be Austan Goolsbee, a University of Chicago economist, Obama said.
Volcker is no stranger to economic crises, having led the Fed under two presidents from 1979 to 1987. Volcker is a legendary central banker who raised interest rates and restricted the money supply to tame raging inflation in the 1980s. It was a painful prescription that helped send the economy into one of the nation’s worst recessions.
However, he is largely credited with ushering in nearly three decades of relatively low inflation — an unthinkable feat in the 1970s, when the country was grappling with high unemployment, high interest rates and ever-rising prices.
Obama speaks highly of Volcker, saying that “he pulls no punches and seems to be fairly opinionated.”
Obama spoke as businesses were preparing for what many fear could be a disastrous month. And there was more bad news on the economy’s current state.
The government reported that jobless claims had remained at recessionary levels, consumers had cut back on their spending by the largest amount since the 2001 terrorist attacks, orders to U.S. factories had plunged anew and home sales had fallen to the lowest level in nearly 18 years.
Obama said his new economic panel will include people from business, labor and academia, “who will bring to bear their wisdom and expertise on the formulation, implementation and evaluation of my administration’s economic recovery plan.”
His economic team largely complete, Obama is expected to introduce national security officials next week, including Hillary Rodham Clinton as his secretary of state.
Now that Obama has spoken, investors will no longer be holding back. This could mean the ailing economy is on its way to bouncing back. Sometimes simple words of assurance from the highest official in the land is all that a country needs to get back on its feet again like the proverbial phoenix, rising up from the ashes.