The ailing economy tops new US President Barack Obama's massive agenda, as he swings into action on Wednesday for crisis talks with his top advisers on his first full day in office.
Underscoring the magnitude of the economic woes facing Obama was the massive stock selloff on Wall Street on Tuesday as he took his oath, highlighting the worrying health of the banking industry at the core of financial turmoil.
"The state of the economy calls for action, bold and swift, and we will act not only to create new jobs, but to lay a new foundation for growth," Obama said in his inauguration address as a crowd of two million watched him make history by becoming America's first black president.
Obama inherits the worst economy in the post-World War II era.
The world's biggest economy is reeling from a deep recession with about 500,000 jobs being lost every month and consumer confidence at a record low amid a credit squeeze and near collapse of the key housing and auto industries.
Obama "is inheriting a situation no president has inherited since FDR (Franklin D Roosevelt)," said his top economic adviser, Lawrence Summers, before Obama took his oath.
Pointing out that the economy is saddled with more than a trillion dollars in budget deficits with 2.6 million jobs lost last year, Summers warned that the economic problems were "not going to be fixed in a week or a month or a year.
"You look at the forecast, there's no question, almost no question, that the economy is going to decline for some time to come. But what we can do is demonstrate a commitment to the job creation," said the ex-Treasury secretary under president Bill Clinton.
Obama meets his key economic team on Wednesday to endorse a strategy to contain financial turmoil and revive the economy that some forecast could have contracted by up to six percent in the final quarter of 2008.
Key tasks awaiting Obama include getting swift congressional approval for a giant plan to revive growth through tax cuts and investments, and easing a credit squeeze that is posing a major hurdle to stimulating commercial activity.
Top Democratic party lawmakers have agreed to support the 825-billion-dollar stimulus plan, but many Republicans are skeptical, saying the deficit-ridden nation cannot afford to borrow and spend its way back to prosperity.
"It's extraordinary and it's painful to have to do in terms of our debt but it's something that we have to do or we run the risk of double-digit unemployment," said Obama's senior White House adviser David Axelrod.
The mammoth stimulus plan calls for some 275 billion dollars in tax cuts and 550 billion dollars in investments, but the underlying strategy is to create jobs at least three million to prevent the unemployment rate from soaring to double digits from the current 16-year high of 7.2 per cent.
Lawmakers expect the package to be passed before mid-February when Congress goes into a short recess.
Key components of the stimulus package include infrastructure spending, energy production from renewable sources, medical care for low-income individuals and helping schools and colleges prevent cutbacks.
Workers will also receive a refundable 500-dollar tax credit.
But Obama's aides indicated that the new president might push harder on banks to ease lending practices to stimulate economic activity, with reports suggesting that an "aggregator bank" may be set up to buy bad assets from other banks in order to restore the flow of credit.
"The focus isn't going to be on the needs of banks. It's going to be on the needs of the economy for credit," said Summers.
"Whether it's for housing to prevent foreclosures, whether it's for automobile loans, consumer credit, small business, municipalities, the focus will be on credit," he added.
Even before his inauguration, Obama strongly lobbied Congress to release a second 350 billion dollar tranche under a massive financial bailout package.
Up to 100 billion dollars from the tranche could be used to address home mortgage foreclosures at the heart of the financial turmoil.
"Credit conditions remain abnormal, and financial markets are unlikely to heal fully while home prices are still falling," economists at Bank of America said in a recent report.
They estimate the US economy contracted nearly five per cent in the final quarter of 2008 and "is falling at a similar pace" in the first quarter of 2009.