By JIM KUHNHENNWASHINGTON (AP) â¿¿ Just as President Barack Obama is pushing new initiatives on gun control and immigration, the gloomy old problem of a sluggish economy is elbowing its way back into prominence. Consumer confidence is falling, the economy is contracting and large automatic spending cuts are threatening to hit the Pentagon and other programs, with uncertain consequences. These troubles arise as Obama's public approval is improving and as he begins to use his sway to promote the key features of his second-term agenda. The White House, the Federal Reserve and independent economists attributed the shrinkage in gross domestic product and the drop in consumer confidence to one-time events and said underlying economic factors were still showing encouraging signs. But in politics, power resides in the moment. Any immediate economic setback â¿¿ or the perception of one â¿¿ could weaken Obama's clout or at least distract him as he carefully tries to put his imprint on initiatives dealing with immigration and gun violence. At the White House, there was no evidence of a course alteration. And White House officials expressed confidence in consumption and investment trends that showed evidence of strength. But the Commerce Department announcement Wednesday that the economy shrank at an annual rate of 0.1 percent came a day after the Conference Board reported a sharp decline in consumer confidence in January. That drop, together with one in December, erased consumer confidence that had built up in 2012. What's more, the new data comes just two days before the government releases the January unemployment report, which economists believe will stay at the still-high rate of 7.8 percent, where it has held for two months. "What's most critical to consumer confidence is employment," said Lynn Franco, director of economic indicators at the Conference Board. "We've had spurts where we've had strong job growth and we've seen a rebound in confidence, and then suddenly you have a pullback in employment and you get a pullback in confidence. So we need a convincing story, and that's going to take several months of jobs growth."