Can Obama's Mood Spur The Economy?

President Obama opened with optimism in his state of the union address last night, "We will rebuild, we will recover, and the United States of America will emerge stronger than before."

As important as the president's policies are to the success of the economic recovery, his mood and message are just as critical, CBS News correspondent Jim Axelrod reports.

"History tells us that words will make a difference," said Larry Sabato of the University of Virginia's Center for Politics. "If a president's words can inspire confidence in the public, they will respond with behavior that actually improves the economy."

It's a delicate balancing act the president has to walk. When he was selling the stimulus, he needed to generate enough fear to spur congress to action.

"We have inherited an economic crisis as deep and as dire as any since the Great Depression," said Mr. Obama.

But now he must generate enough confidence to spur business owners to start hiring, and consumers to start buying.

"We could start turning around next week, we could start turning around this week if we had confidence that the Obama administration knew what they were doing," said political and economic commentator Ben Stein. "Optimism is everything."

And pessimism, as we learned from Jimmy Carter's "malaise" speech, leads nowhere good.

"It is a crisis of confidence," Carter said. "We can see this crisis in the growing doubt about the meaning of our own lives."

Carter's gloomy rhetoric was blamed for driving a floundering economy into a deeper rut.

"It tended to depress people, rather than to lift their spirits," Sabato said. "Reagan was just the opposite."

"We have every right to dream heroic dreams," Reagan said in 1981.

Ronald Reagan's confidence in the face of double digit inflation and even higher unemployment than Carter faced, helped lift the mood and lead the economy.

"Reagan was trying to turn the page, and he was using rhetoric to do it," Sabato explained. "And presidents can do it. They have the bully pulpit."

But Mr. Obama believes that understating reality would put his own credibility - and the entire recovery - at risk.

And that explains his mixed tone for now. He acknowledges that the truth is tough, but is trying to inspire confidence that the future will be better for entrepreneurs, like Jeff Takle in Boston.

"My eyes are lighting up 'cause this is actually, this is opportunity time," Tackle said.

Takle still believes, in spite of many tough setbacks, that his Internet start-up is taking off. He expects to quadruple his revenues this year.

Takle believes a positive attitude is more important than a good idea.

To make the economy grow, the president needs to convince millions more small business owners and consumers alike to share Takle's outlook.

"They want to be inspired, they want to be happy," Sabato said. "They're not interested in wallowing in pain, so when a president offers them that opportunity, they take it."

"It is time for America to lead again," said President Obama in his Tuesday speech.

A lesson from the past - that might be a timely guide - for the future.

  • Jim Axelrod

    Jim Axelrod is the anchor of the Saturday edition of the "CBS Evening News" and a national correspondent for CBS News, reporting for the "CBS Evening News with Scott Pelley" and other CBS News broadcasts.