President Barack Obama may have made his address last night in the halls of Congress. But his speech was aimed at the American public. “I know that for many Americans watching right now, the state of economy is a concern that rises above all others, and rightly so,” he said. “If you haven’t been personally affected by this recession, you probably know someone who has: a friend, a neighbor, a member of your family.”
Judging by the latest data from the Consumer Confidence Index, released yesterday, we are all feeling the effects. The Index,which measures household optimism and willingness to spend, fell to a record low of 25.0, down from 37.4 in January. To give you some perspective, back at the start of 2007, the number stood at more than 100.
Now, some people view a sharp fall in consumer confidence as a positive sign. Since 1975, stocks have posted a double-digit rebound after every significant dip in the Index, according to a study last year by Fidelity Investments.
Still, given that this recession is being called the worst since the Great Depression, our normal guideposts may offer little direction (or comfort).
Hence, Obama’s speech.
Last night, he explained why the government was spending billions of dollars to bail out banks (“It’s not about helping banks,” he said, “it’s about helping people.”). He outlined four categories–alternative energy, autos, health care and education–in which the United States must invest more to compete on the global stage. He called up past examples when, in the face of dire challenges, the country implemented historic and important changes (“From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age,” he said.).
And he asked us to stare down our fears today, so that we could “restart the engine of our prosperity” and seize the opportunity to do ‘something worthy to be remembered.’”
It was a lofty and moving address. But my question for you is this: Did you buy it? Do you feel more confident and think Obama’s plan will help restore economic growth?
Or are you skeptical, like economist Tyler Cowen, who wrote about the speech in his blog?