Obama: Economy is "going to get worse"

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Well, it wasn't as though Barack Obama started singing "The Sun Will Come Out Tomorrow" on "Meet the Press" this morning.  Although that would be newsworthy...

Instead he acknowledged that things are bad, yet provided some hope for the future in kind of a good news, bad news type scenario.

The good news? The economy is going to get better.

Recommended: For these four nations, 2012 is worse than the Great Recession

The bad news?  It hasn't cratered yet.

Meet the Press

The POTUS-in-waiting appeared on the world's longest running television show this morning with Tom Brokaw.   That's the last time we'll say that as Mr. Brokaw announced (surprising no one) that David Gregory will become the permanent replacement for "Meet the Press" starting next week.  Monitor colleague David Cook has all the details here.

In discussing our turbulent economic straits, Obama said things are bad, but he put it in perspective.

"It's important for us to remember that as tough as times are right now, they are nothing compared to what my grandparents went through or what the greatest generation went through," he said.  "At this point you already had 25, 30 percent unemployment across the country and we didn't have many of the social safety nets that emerged out of the New Deal."

Not getting better

Saying that he acknowledged Friday's bad news of over a half-million lost jobs in the past month, he predicted that it's not going to get any better in the near term.

"When you think about the structural problems that we already had in the economy before we the financial crisis, this is a big problem.  It's going to get worse," he said.

"My number one priority coming in is making sure we have an economic recovery plan that is equal to the task," he added.

Big job

The task is large.  As Monitor colleague Ron Scherer pointed out Friday, there are some major implications for the job losses:

  • When the Federal Reserve meets on Dec. 15 and 16, economists expect the central bank to drop interest rates by half a percentage point, which will take short-term interest rates to 0.5 percent. Foreign central banks are also likely to cut interest rates.
  • Pressure will rise for Congress to enact a massive fiscal stimulus package to try to create jobs.
  • The new jobs report is also expected to push Congress to provide a bailout for the auto industry, because any auto company failure could create yet more economic weakness. Executives of the Big Three testified before Congress on Thursday and Friday, and Congress is expected to consider helping them this week.

Obama's prescription?

The President-elect sounded cautious and appeared to be managing expectations by again emphasizing that the short-term isn't going to be rosy.  Instead, the focus had to be more long-term.

"Fortunately as tough as times are right now, things are going to get worse before they get better," he prefaced.  "There is a convergence between circumstances and agenda," he said.  "The key for us is making sure that we jump start that economy in a way that doesn't just deal with the short term - doesn't just create jobs immediately - but also puts us on a glide path for long term economic growth," he said.

How?

How do you get there?  Obama referenced his Saturday morning radio address where he outlined what needed to be done.

-  Make public buildings more energy efficient.

Make the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s.

Modernize and upgrade school buildings.

-  Expand broadband availability.

-  Modernize the healthcare system through cutting edge technology.

When?

A focus on the longterm doesn't mean there can't be any immediate relief.  Obama said

"I think we can get a lot of work done fast," he said.  "When I talked to the governors - all of them have projects that are shovel-ready that will require us to get the money out the door.  They've already lined up the projects and they can make them work."

Doom

Obama sounded much more confident than former Labor Secretary Robert Reich who questioned on Friday if we should be describing our economy in terms of a depression rather than a recession.

"We are falling off a cliff," Reich wrote in his blog.  "To put these numbers into some perspective, the November losses alone are the worst in 34 years. A significant percentage of Americans are now jobless or underemployed - far higher than the official rate of 6.7 percent. Simply in order to keep up with population growth, employment needs to increase by 125,000 jobs per month."

"When FDR took office in 1933, one out of four American workers was jobless. We're not there yet, but we're trending in that direction," he said.

Transfusion

Although Obama may not agree with that analysis he did liken the state of the US economy to an ailing patient when discussing the budget deficit.

"We've got to provide a blood infusion to the patient right now and make sure the patient is stabilized and that means we can't worry short-term about the deficit.  We've got to make sure the economic stimulus plan is large enough to get the economy moving."

Recommended: For these four nations, 2012 is worse than the Great Recession
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