November 5, 2008 How will President-Elect Obama impact the economy? Play video

(Peter Howe, NECN) - "The worst financial crisis in a century." In his own words, that's what President-Elect Barack Obama walks in to January 20, and what he now has the power to change.

Boston College economics professor Robert Murphy served as a White House economist in 1995-96. In one key area, the $700 billion Wall Street bailout, Murphy expects continuity and change from a President Obama: "He's going to be very supportive of the financial rescue plan. He may want to propose some adjustments and tweaking of it, particularly I think in the components that deal with helping homeowners out.''

In his victory speech Tuesday night, Obama said, "Let us remember that if this financial crisis taught us anything, it's that we cannot have a thriving Wall Street while Main Street suffers. In this country, we rise or fall as one nation, as one people.''

Murphy expects Obama to back calls for another economic stimulus bill. "What he's said suggests that he would be supportive of a more direct spending approach rather than a second round of tax rebates,'' Murphy says. "Spending on infrastructure and definitely something to extend unemployment insurance and food stamps.''

Boston money manager John Osbon of Osbon Capital Management agrees. "The rescue plan is already in place and it's working but again where are the jobs? ... What could he do differently that hasn't been done already? I think Wall Street as well as Main Street would like to see some spending,

These days it's almost a cliché to say that markets hate uncertainty. But a lot of investors do think that now that they know who the next president is, and what economic policies they can anticipate, that could help calm the markets a little -- maybe not immediately, as seen by Wednesday's nearly 500-point Dow Jones drop, but in coming weeks. "Now that we have a president-elect 22 months later, after the start of that campaign,'' Osbon says, "there's a relief going on in markets worldwide.''

One key choice Obama may make within days: a replacement for Treasury Secretary Henry L. Paulson. It needs to be in Murphy's words "a person who reassures the markets, someone who has stature.''

Some names being floated: New Jersey Governor Jon S. Corzine, a former Goldman Sachs CEO; former Federal Reserve chairman (1979-87) Paul A. Volcker; and maybe a return engagement for former treasury secretary (1999-2000) Lawrence H. Summers, who is back to being an economics professor at Harvard after his abbreviated, controversial 2001-06 presidency there.

No matter who it is, Murphy says it won't be an easy job, because ''the economy is rapidly moving into a significant recession.''