Obama offers hope for struggling economy
WASHINGTON (AFP) – As the US economy faces its worst crisis since the Great Depression, the change at the White House ushering in Barack Obama may provide a much-needed psychological lift to sentiment, analysts say.
The president-elect inherits an economy in deep trouble following a collapse of a real estate bubble, a banking sector in tatters and US consumers and businesses retrenching.
Yet some analysts say that the nation’s economic woes are at least in part because of depressed sentiment among both consumers and businesses, which could get a lift from a change at the White House.
"I believe confidence is a critical factor in turning the panic and depression around," said Joel Naroff of Naroff Economic Advisors.
"With a new administration, there is a huge amount of goodwill that Mr. Obama has going into office. This provides the hope that aggressive, quick action coupled with his ability to rally the troops, can start changing perceptions and psychology."
The recession has led to a loss of 2.6 million jobs in 2009 and the economy is reeling from weak output, depressed consumer demand and a sliding real estate market.
Naroff said weak consumer and business sentiment has made what could have been a mild recession much worse.
"Even though they have the money, even though they will not likely lose their jobs or see their businesses fail, people are assuming the turtle position," Naroff said.
"They are hunkering down and cutting back to the bare minimum until they have some confidence that they will survive."
