Obama needs 'yes we can' abroad to help end global recession

The U.S. led the global economy into its worst recession in at least a quarter century. Now the rest of the world is looking to Barack Obama to lead the way out. The trouble is, even the incoming commander-in-chief of the biggest economy can't do it alone.

With industrial nations suffering their first synchronous decline since World War II, Obama needs policy makers in other countries to pull their weight. He also requires a resurrection of animal spirits -- among investors, banks, companies and consumers - - if his government-led effort to revive growth is to succeed.

"We're facing a more pervasive, more widespread downturn in the global economy than ever before," says Allen Sinai, chief global economist at Decision Economics in New York. "It cries out for other countries to stimulate their economies, and stimulate them strongly, rather than to rely on a U.S. upturn to recover."

So far the response has been mixed. Some Asian nations, notably China, have announced big stimulus packages. While Europe has been more restrained, countries including Germany are coming around.

Obama, who will be sworn in as president Tuesday, has pledged to do whatever it takes to counter what he says may be the worst economic crisis since the Great Depression. The centerpiece of his plan: a roughly $850 billion, two-year package of tax cuts and increased spending that his team has worked out with Congress. That's equivalent to about 3 percent of gross domestic product during the two years.

Some economists say it won't be enough. Robert Reich, labor secretary under President Bill Clinton and now a professor of public policy at the University of California, Berkeley, advocates a $900 billion package -- and says Obama, 47, should be prepared to do even more if necessary.

"The danger is not that the government will do too much," says Reich, who advised Obama during his presidential campaign. "The danger is that it will do too little, too late."

A study by Obama's economic advisers found that the U.S. would still be saddled with an unemployment rate of about 7 percent in the fourth quarter of 2010, even with a large stimulus package. Without the stimulus, the jobless rate was projected at 8.8 percent. In December, unemployment was 7.2 percent, the highest in almost 16 years and well above the 4.4 percent level at the end of 2006.