I'm alarmed by the way the Obama administration has been hyping the slight uptick in good news about the economy in the last few days. Yes, the Dow had its best week since November, Citigroup and Bank of America say they expect to make money this quarter, GM won't need an immediate infusion of tax dollars, and retail spending seems to have stabilized, at least for now. On Thursday Obama himself told business leaders that the crisis is "not as bad as we think," and on Friday National Economic Council director Larry Summers said the spending numbers were "modestly encouraging signs" that the stimulus might already be having an effect.
As someone who has repeatedly defended Obama from GOP efforts to blame him for the current crisis and to deride the "Obama economy" only 55 days into his presidency, I think the administration could be playing a dangerous game. Live by the week's economic news, die by it as well. If the Dow dives next week, or retail spending dips again, does that mean the stimulus failed?
I think the administration got rattled by Wall Street criticisms that Obama was at risk of talking down the markets and, at minimum, simply wasn't paying enough attention to them. I thought that was the right course, actually — he needs to take a longer view, and the Dow isn't necessarily the most important indicator of economic vitality. And just when some of Obama's critics are starting to get called on their market boosterism — boy, has Jim Cramer's stock taken a dive this week — unfortunately, their nagging seems to have had some effect.
I thought Larry Summers sounded a little bit like Cramer when he insisted there's never been a better time to buy, which Andrew Leonard captured earlier today, hailing possible big gains from investment in construction and the stock market. And not surprisingly, Cramer was impressed by Summers' speech and took it as evidence that the administration is listening to guys like him. “I think they got some religion when they saw the market go down so much,” Cramer said on CNBC today.
I think it's important that Obama project optimism that we can turn this problem around — and indeed, that we've already begun to — with his economic stimulus package, banking reforms and mortgage efforts. But to hail the earliest signs of progress in a battle that's likely to take months, if not years, seemed like a rare Obama political mistake. We'll see. I'll be talking about Obama's first 55 days in office on the CNN's "D.L. Hughley Breaks the News" Saturday at 7 PT/10 ET and Sunday at 8 PT/11 ET.