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Obama's Economists Need to Be Near Perfect

What remains to be seen is exactly what role Volcker and Summers will ultimately play in the economic recovery. "I'm not sure exactly what his and Larry Summers' role are going to be. But I think where he will help will be on certain matters and how they relate to finance markets," LaVorgna added.

Williams says that Volcker's decisions while head of the Fed makes him an ideal candidate to help Obama navigate the tough U.S. economic environment.

"What's phenomenal about Volcker is that he's battle-hardened," Williams said. "The economy became much stronger because of his actions at the helm of the Fed. He made some bold decisions. He increased interest rates dramatically when many thought this would hurt and not help. But he tamed inflation and interest rates came down. He's no-nonsense. He speaks his mind. This is not a footnote on his resume. His commitment is to improving the economy."

"An Incredible Amount of Speed"

Feroli says the first order of business for Obama's team must be to address is the continuing crisis in the financial system. On the day Obama took the oath of office, stocks were pressured as a lack of confidence continued to batter the financial sector. Royal Bank of Scotland (RBS) plummeted 69%, State Street (STT) fell nearly 60%, Bank of America (BAC) dropped 29%, Citigroup (C) declined 20%, and JPMorgan Chase lost 21%.

"Obviously there are a lot of issues with the banks today," said Feroli. "If they put the financial system third or fourth on their list, they could be in a lot of trouble. The problem is not going to sit around for a couple months for a solution."

LaVorgna said that the team needs to lay out a plan on how they expect to use the second half of the TARP funds. "If you want markets to improve, the sooner the better," he said. "Markets will improve depending on how they view the policies. If the markets improve, you can build in a bottom to forecasts. Right now, unfortunately, there isn't a bottom as economic data continue to worsen. There's a tremendous amount of uncertainty."

Fortunately, LaVorgna says the Obama economic team has moved with "an incredible amount of speed. I can't remember a time, if ever, you had a president-elect start giving economic speeches and announce his cabinet as quickly as he did. I think policymakers realize they need to do things quickly. They can do a lot in 100 days, more than we ever thought possible looking back at history."

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