The Economic Forecast calls for Gale Force Winds

As we draw closer to the inauguration of President-Elect Barack Obama, many Americans are looking for the change that is needed today. Not necessarily a policy change, or even a change in regime, but a change in the economic outlook. Things look abysmal. The national unemployment rate is expected to increase from the current 6-7% to approximately 12-13%. Today’s economic situation has been compared to the Great Depression. For all of us, we all need to hope that President-Elect Obama can deliver on his promise of change and take action to fix the economy.
However, it seems that people believe that Obama can just wave a magic wand a make things better as soon as he enters office on Tuesday. The "recession" is just not that simple to fix. President Bush has taken the right steps to put things in motion to correct themselves. He and Ben Bernake have used policy and interest rates to provide all the right incentives to stimulate the economy. So why hasn’t the economy been stimulated?
Well half the problem in my opinion is the media. There are constant reports of job loss, low consumer confidence, stock losses, and banks requiring bailouts that are negatively impacting consumer confidence. We all know that things are bad, but the more the media reports how bad things really are, the less likely consumers are to make any type of financial decision that may help to stimulate the economy. Who even knows what may happen with the tax return checks we will see this year! Some may hide the money under the mattress for the ensuing economic catastrophe. At least we haven’t experienced any bank runs yet.
The reports on the state of the economy are so alarmingly bad that otherwise"smart financial decisions" have been delayed or disbanded altogether. Interest rates are at an all-time low, the price of goods has declined sharply (most notably gasoline), and the housing market is a prime buyers market for once. My wife and I have been searching for homes and have found remarkable deals in the process. Yet people refuse to spend money, invest money, buy homes, or proceed with normal financial matters partially out of fear the media has instilled in us about the pending economic doom.
Honestly, the media just needs to stop reporting exactly how bad it is or at least not in such negative detail. This alone will help to increase consumer confidence and may result in the thawing of our pocketbooks. Note: I’m not saying spend money like you’ve won the lottery, but if you’ve got it, now is the time to use it to take advantage of some great deals.
Now for those of us who are worried about some of President-Elect Obama’s policies about raising taxes on the rich and the state of our welfare nation, take solace in this; there is no way President-Elect Obama can raise taxes now on anyone. As I have told others, if he were to raise taxes in his first year in office during this recession, it would spell the certain end of his presidency by 2012. With unemployment as high as it is, where does Obama plan on collecting these taxes from? There are fewer people working to pay taxes let alone pay higher ones. If he tries to increase the taxes on businesses it will almost certainly result in the loss of more American jobs and even less taxes to be collected.
I predict that President-Elect Obama will have no other option but to cut the federal budget, sit on his spending plan, and try to weather this economic crisis. Given the historic election, and the historic crisis this nation is facing, President Elect Obama may end up being either a historic American figure or a historic idiot by stubbornly pursuing the financial plan he discussed during the election. That’s the key difference between ideal and reality; Obama’s plan was rooted in a static, ideal environment where everyone benefitted and outside factors played no role. These same ideas, when met with reality, have no chance of success.
So to those of us who are currently hiding in the basement during hurricane "Main St. To Wall St.", it’s safe to come out. Things are bad, but it’s not the end. The four horsemen are not in sight. If we are to weather this financial crisis, consumer confidence has to start increasing. Spending more will increase sales and the need to bring back those jobs that were lost. Don’t go out and deficit spend, but as I said before; if you’ve got it, now is the time to use it. That’s the main way to weather this storm without anyone having to call FEMA.