WASHINGTON — The wave of bad economic news that helped carry Barack Obama to an election victory this month now threatens to swamp his presidency even before he takes the oath of office Jan. 20.
As the Democratic president-elect scrambles to assemble an economic team, the crisis that at first seemed confined to Wall Street and the nation's financial markets has been raging through Main Street and the regular economy of labor, goods and services.
As a result, Obama would enter office and immediately face a maelstrom of painful decisions fraught with the potential for costly mistakes.
"Obama's hand is being forced by the crisis," said Ellen B. Zenter, senior U.S. economist at Bank of Tokyo-Mitsubishi in New York. "He's not going to have the luxury to wait until inauguration before getting involved" in managing the economy's troubles.
In the last two months, a year's worth of housing price plunges, credit freeze-ups and financial firm collapses have caused consumer confidence to crumple, employment to tumble and retail sales to plummet.
The combination has helped to pull down the rest of the global economy, which until recently resisted the negative tug of U.S. troubles. And the extraordinary strength of the undertow at home is reflected in the fact that an abrupt collapse could occur in America's last big bastion of manufacturing -- the auto industry.
"If they were facing recession-level sales, U.S. automakers would have been prepared to handle that," said David E. Cole, chairman of the nonprofit Center for Automotive Research in Ann Arbor, Mich. "But the problem is this credit crisis; it's sending sales off a cliff."
Asked how long, under current conditions, industry giant General Motors Corp. could hold out against bankruptcy, Cole, a veteran observer of the business, said: "A few weeks."
The economy's problems are greater than any faced by an incoming president since at least Ronald Reagan in 1980. And there is a palpable fear in Washington that they could grow worse. The dramatic steps taken by Treasury Secretary Henry M. Paulson and Federal Reserve Chairman Ben S. Bernanke have helped, but they have not broken the back of the problem.
Last week, Paulson in effect acknowledged that what was supposed to have been the centerpiece of a $700-billion financial rescue package approved by Congress in early October -- a plan to buy up troubled mortgage-backed securities in order to unclog the financial system -- has proved unworkable.
