Obama reassures nervous nation on ailing economy

By: AP
By: AP

CHICAGO (AP) -- President-elect Barack Obama sought to reassure the nation and nervous holiday shoppers about the ailing economy Wednesday as beleaguered stores braced for their most important month of the year.

"Help is on the way," he proclaimed at his third news briefing on the economy this week. Fifty-five days away from taking office, he declared he would have an economic plan ready for action "starting day one."

Investors' improved spirits kept pace. The Dow Jones industrials climbed 247 points, marking the first time since last spring that the average had risen for four straight sessions.

To help with ideas from outside the White House, Obama announced he was forming a new team of advisers with former Federal Reserve Chairman Paul Volcker as the head.

"There is no doubt that during tough economic times family budgets are going to be pinched," Obama said. "I think it is important for the American people, though, to have confidence that we've gone through recessions before, we've gone through difficult times before, that my administration intends to get this economy back on track."

The crucial holiday shopping season gets under way in earnest on Friday, the day after Thanksgiving, with deep discounts already in place as stores try to lure buyers who are worried about their jobs and homes.

Volcker, 81, will head the President's Economic Recovery Advisory Board. The board's top staff official will be Austan Goolsbee, a University of Chicago economist, Obama said.

Volcker is no stranger to economic crises, having led the Fed under two presidents from 1979 to 1987. Volcker is a legendary central banker who raised interest rates and restricted the money supply to tame raging inflation in the 1980s. It was a painful prescription that helped send the economy into one of the nation's worst recessions.

However, he is largely credited with ushering in nearly three decades of relatively low inflation - an unthinkable feat in the 1970s, when the country was grappling with high unemployment, high interest rates and ever-rising prices.

"He pulls no punches," Obama said of Volcker. "He seems to be fairly opinionated."

Obama spoke as businesses were preparing for what many fear could be a disastrous month. And there was more bad news on the economy's current state.

The government reported Wednesday that jobless claims had remained at recessionary levels, consumers had cut back on their spending by the largest amount since the 2001 terrorist attacks, orders to U.S. factories had plunged anew and home sales had fallen to the lowest level in nearly 18 years.

Still, investors produced the Dow's fourth straight day of gains.

Fresh government bailout programs this week were given much of the credit. But Obama's encouraging words seemed to help as well.

"People should understand that help is on the way. And as they think about this Thanksgiving shopping weekend, and as they think about the Christmas season that is coming up, I hope that everybody understands that we are going to be able to get through these difficult times," Obama said. "We're just going to have to make some good choices."

As for his own choices for top officials, he defended his selection of former Clinton officials to help run his administration.

"The American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever," Obama said.

"What we are going to do is combine experience with fresh thinking," he said. "But understand where the vision for change comes from. First and foremost, it comes from me. That's my job."

Obama said he will announce the remaining members of his new economic panel in the coming weeks. He already has named New York Federal Reserve President Tim Geithner as his treasury secretary and Congressional Budget Office Director Peter Orszag as his candidate to run the White House Office of Management and Budget.

Geithner was a Treasury Department official during the Clinton administration, and Lawrence Summers, who will head Obama's National Economic Council, was Clinton's treasury secretary. Other Clinton administration names include Eric Holder, who will be Obama's attorney general, and Rahm Emanuel, the president-elect's chief of staff.

"What I don't want to do is to somehow suggest that because you served in the last Democratic administration, that you're somehow barred from serving again," Obama said. "Because we need people who are going to be able to hit the ground running."

Obama said his new economic panel will include people from business, labor and academia, "who will bring to bear their wisdom and expertise on the formulation, implementation and evaluation of my administration's economic recovery plan."

His economic team largely complete, Obama is expected to introduce national security officials next week, including Hillary Rodham Clinton as his secretary of state. He is expected to announce he has asked Defense Secretary Robert Gates to remain at the Pentagon for a year. James Jones, a former Marine Corps commandant and NATO commander, is Obama's pick to be national security adviser.

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Stephen Ohlemacher reported from Washington.

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