New managers often find themselves having to clear up the mess left by the previous incumbent. But it’s particularly true for Barack Obama, who’s due to be sworn in as the 44th President of the United States at 5pm UK time today. He takes over the biggest leadership job in the world at a time when his country’s economy is in freefall, and its international standing has fallen to new lows. Yet such is the excitement generated by his election that some seem to think he can not only salvage the global economy, but also bring about world peace and save the planet – all in the space of four years. Not exactly the easiest of managerial to-do lists...
Top of the list will be the diabolical state of the US public finances, currently in their worst shape since the Depression. The economy has been in recession for a year; unemployment has soared to a 16 year-high of 7.2%; retail sales have fallen for the last six months; the housing market is virtually at a standstill, and the budget deficit could spiral above $1trn before too long as the Government continues to throw money at the banking sector. And that’s just the official figures – many think that the true picture is actually even worse.
So what’s the new President going to do about it? Well, he’s trying to get an $800bn stimulus package through Congress – the precise details are still a bit hazy, but a substantial chunk will be invested in infrastructure projects like roads, schools and power grids, which should help employment in the short term and (hopefully) competitiveness in the longer-term. There’ll also be tax cuts, which should help him get the bill past the Republicans.
However, nobody knows how big Obama’s government will be – will it focus on boosting the economy by direct intervention, or will it focus on putting money back into people’s pockets? Judging by some of his rhetoric, Obama certainly won’t be as friendly to big business as the previous administration, so it’s likely that Wall Street will see its wings clipped – particularly in light of recent events. The markets will be listening closely to today’s inauguration speech to try and glean a few clues.
In other words, he’s got enough on his plate sorting out this mess – let alone issues like international diplomacy and climate change (which may end up getting shunted a bit further down the priority list). Nevertheless, history has shown that the US is a dynamic and energetic place, with a seemingly limitless capacity for re-invention (as evidenced by the first black President). And unlike many big economies, its working population is still growing, which should eventually help its recovery. That's why here at MT we're still very excited about the new administration, and we hope (for all our sakes) that he can live up to some, if not all, of his great expectations. So good luck, Mr President – you’ll need it...
Incidentally, this month’s MT features President George W. Bush in our regular ‘If I Could Start Again’ column, dreaming about what might have been. OK, so technically we made it up, but have a read anyway.
In today's bulletin:
President Barack Obama's poisoned chalice
Deflation worries grow - but RBS bounces back
Burberry downsizes as progress checked
Asos boosted by young trendies
Editor's blog: The problem with British cars