Will Obama Take Credit For A Recovery He Didn't Create?

Since March 10, the Stock Market has gone from 6547 to above 8500; up almost 30 percent. The start of the rally, in early March, was triggered by some data that looked backward to the month of February. In that month, there were some small indications that the economy was starting to turnaround. Since then, there have been consistent month after month indications that things are in a turnaround.

But, lets put that original February data into perspective.

First, Obama hadn't even been in office for a week before the statistics for that month began being formulated. For the most part, the positive signs for that month were already cast in stone before Obama got into office.

Second, Obama's stimulus package wasn't signed into law until February 17; and, the bulk of the bill, even as of today, has yet to have been implemented. In fact, only 27 percent of it will be implemented this year; once started. So, therefore, that stimulus bill had nothing to do with the Stock Market rally that began almost a month after signing the stimulus package into law. If the stock market had thought that the Stimulus Bill would have helped the economy, the Stock Market would have rallied the day it was signed into law. But, it didn't.

Third, February was the month that Obama was painting a worst-case/gloom-and-doom prediction if his stimulus bill wasn't signed. Literally, he was scaring the American consumer. But, despite him, the seeds of the recovery were sprouting in the background.

Most every recovery from a recession occurs, on its own, within 14 to 18 months after it starts. It now appears that this might be the case with this one. If so, that means all those billions of dollars upon billions of dollars in stimulus spending over the next 3 years might well be totally unnecessary. In fact, all that spending probably will create future problems like inflation and massive deficits that may actually hurt our economy.

You should also be mindful of this. Even if the economy has turned around, unemployment will continue to rise until companies actually see a rise in orders and sales. Unemployment is always a lagging indicator and it is often watched by the "public" as their indicator that a recession is over. However, the recession will end long before people start getting hired again. GM, for example, will directly let 20,000 people go when they shut down Pontiac this year and when they effect other cost reductions. There will probably be another 20,000 people hitting the unemployment lines when GM cuts its 6600 dealerships in half by the end of 2009. Beyond GM, there are a whole host of companies that have announced additional layoffs in just the last month.

I get the distinct feeling that Obama is preparing for his victory lap; even though he had nothing to do with it. But, whenever something happens on a President's watch, that President takes credit or blame for it. Sadly, the American public doesn't understand this reality; they only understand what is happening now. Because of this, Obama will get the credit for this recovery. But, he should watch out. Many of the other things that he has set in motion with his stimulus plan and budget could put this country back on its heals in a year's time. That's just my opinion.