In the midst of celebration, darkening clouds

Program Note: Tune in tonight to hear more from David Gergen on AC360° at 10pm ET.

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/POLITICS/01/21/obama.business/art.obama.briefed.wh.jpg caption="Members of the National Economic Council brief President Obama on the economy Wednesday."]

David Gergen | Bio
AC360° Contributor
CNN Senior Political Analyst

The most consistent line one heard these past few days during the celebrations in Washington was, “I never thought I would live to see this day.” But those who follow the economy closely, including Barack Obama’s own team, were whispering something much scarier than were the millions of others who were so joyous.

“I never thought I would live to see a day when the economy was in such danger, that interest rates were near zero, when some $20 trillion in wealth has vaporized, and when no one is sure what to do.” That, in a nutshell, were the sentiments one heard quietly on the sidelines of parties from economic heavy hitters.

In the two days that have passed since he took the oath, Obama has gotten off to a smooth, smart and successful start, impressing the general public. But dark, stormy clouds continue to gather over the economy:

• Paul Volcker, one of the most respected economic figures in the country, told Congress yesterday that it may take trillions of federal dollars in spending, loans and guarantees to put us aright. That comes at a time when Washington is already deeply in hock.

• The markets have been on a roller coaster since the inauguration. On Tuesday, they suffered their biggest fall on any inauguration day in history; on Wednesday, they climbed up; today, they are down again. As one observer told me today, “there just isn’t any confidence yet.”

• There is growing talk in both the U.S. and the U.K. that banks are continuing to weaken so much that governments may have to nationalize them – a huge step. And few think that if Washington takes over Bank of America and Citi that it can stop there. “How will J.P. Morgan compete against one percent loans from a nationalized Bank of America? It can’t. If we go down that road, nationalization would have to be widespread.” John Gapper, a noted columnist, says today in the Financial Times that nationalization of the top 10 banks in the U.S. could easily cost a trillion dollars.

• Unemployment continues to climb. Microsoft today announced the first broad layoffs in its history. How many more jobs will be lost in coming months is anybody’s guess. One well-informed observer told me over the weekend that the job losses of 500,000 a month over the fourth quarter – dramatic as they were - are likely to be topped in the first quarter of this year, perhaps reaching 750,000 a month.

• Meanwhile, questions are rising about whether a stimulus plan heavy on infrastructure will actually work. The Congressional Budget Office yesterday said that more than half of the planned spending would not occur until after fiscal year 2010. Is that way too late? And today the Wall Street Journal on its front page reports on how political leaders are already intervening on how bank bailout funds are allocated. Can you imagine how many snouts will be in the trough if money for roads, bridges and the like are not carefully, carefully controlled?

• Finally, it appears that Tim Geithner will be confirmed at Secretary of the Treasury – which is very good news for Obama. Geithner is highly talented. Yet questions now swirl about him, asking whether he can still be a strong, effective chief economic spokesman for the administration. We shall see.

America at the moment is in a highly celebratory mood, as it should be. The man, the moment, and his message of hope all came together beautifully on Tuesday. But we should brace ourselves: we will need every bit of the energy, unity and goodwill of the past few days to get us through the coming months.