For weeks, President Obama has been trying to balance candor about the sad state of the economy with confidence that the situation will eventually improve. Last week, despite plenty of contrary evidence, he leaned more heavily than ever toward the optimistic side.
In a speech at Georgetown University last Tuesday, Obama said his administration's recovery program is "starting to generate signs of economic progress." His message was that even though the economy remains in deep trouble, "recently we have seen tentative signs that the sharp decline in economic activity may be slowing."
Overall, however, the economic news last week was hardly reassuring. The government reported that retail sales dropped 1.1 percent, wholesale prices fell 1.2 percent, and industrial production declined 1.5 percent in March compared with February. Housing construction in March fell to the second-lowest level on record, and foreclosures jumped 17 percent from February to March. Indeed, Obama acknowledged the lingering problems by saying, "There will be more job loss, more foreclosures, and more pain" before things fully turn around. This week, despite some better than expected earning reports from financial firms like Bank of America, more bad news emerged. The index of U.S. leading economic indicators fell last month by 0.3 percent, which was steeper than forecast and suggests any recovery could still be off in the distance.
While polls show a solid majority of Americans are backing Obama, thousands of his critics (encouraged by Fox News and conservative organizations) held April 15 "tea party" protests that they hope will spur an antitax, anti-big-government movement. House Republican leader John Boehner said, "Our economy will improve, but it will be because of the ingenuity and hard work of American workers and small business, not because of the Washington Democrats' misguided policies that rely on recklessly spending taxpayer dollars."
White House aides say the significance of the tea parties' attendance was exaggerated by Obama opponents and argue that things are slowly getting better. They note that the administration's economic plans are now largely in place in the form of massive increases in government spending, efforts by the Federal Reserve to funnel money into the economy, and an ongoing overhaul of the financial industry. Now, the Obama team wants to find as many examples of progress as it can to inspire confidence in the nation's resilience and in the new president.
Last week, Obama announced that the 2,000th transportation project had been approved using money from his stimulus package, and both he and his surrogates will continue to make similar upbeat announcements in the coming weeks. White House Press Secretary Robert Gibbs says Obama is encouraged that his recovery plan is "kicking in." But he adds that the president is seeking a balance between calling attention to the positives and admitting that the economy is very sick and will take time to recover.
Obama wants to show that he remains intensely focused on the domestic economy—voters' top concern—even though he has been traveling widely this month. He visited with foreign leaders in Europe and Turkey in early April and went to Mexico and Trinidad and Tobago last week to confer with Latin American leaders. "It has now been 12 weeks since my administration began," the president said at Georgetown. "And I think even our critics would agree with at the very least we've been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action—action that has been unprecedented in both its scale and its speed."
Echoing Obama, Federal Reserve Chairman Ben Bernanke said last week that there are "tentative signs" that the recession may be ending, citing home sales, home building (before the latest data came out), and consumer spending on cars and other products. The Fed's Beige Book, a regular survey of informal observations from its regional banks, offered a mixed report. It found that while "overall economic activity contracted further or remained weak" and the job market is not improving, five of its 12 regional banks are reporting a moderation in the rate of economic decline.