Obama's New Tack

I'm glad President Obama is taking my advice - at least somewhat.

When I posted last week that investors are just waiting for some good news, or a real recovery plan out of Washington, he must have been paying attention.

While the administration has still failed to come up with plan, Obama has decided to bring the good news. First, his press conference on Friday in which he said his projections for the economy are optimistic. I think he used the phrase, "The economy is strong," which is ironic since he (and others) mocked John McCain for saying basically the same thing during the Presidential campaign. Then, he had Ben Bernake on "60 Minutes" saying that the recession will probably end in 2009. Finally, the White House again announced yesterday that the economy is fundamentally strong despite the current mess.

All of this upbeat talk has seen positive effects on the stock market, which was up for most of the day today (a 5th straight day of gains though it looks like it might close down a tiny bit).

The real question is whether the optimism will lead to a sustained recovery. It's doubtful. Which means Obama is going to have to come up with a plan still. However, the stock market is not an indicator of how the economy is doing, but an indicator of how people think the economy is doing. All the positive talk can have a big impact on consumer confidence, which might help lead the way out of the "mess" we are in right now. But without a real plan forward, consumer confidence will undoubtedly tumble and the current progress will just be another speed bump in the market's race to the bottom.