President-elect Barack Obama stands with former Federal Reserve Chairman Paul Volcker, chairman-designate of the Economic Recovery Advisory Board, 26 Nov 2008

U.S. President-elect Barack Obama has named more appointees to his economic team.

Mr. Obama announced at a news conference Wednesday morning that former Federal Reserve Chairman Paul Volcker will head a new economic advisory panel.

This week, Mr. Obama has already identified several people he wants to hold key economic posts in his administration, including his choice for Treasury Secretary, Timothy Geithner, and Congressional Budget Director, Peter Orszag.

He also announced plans for a new economic stimulus package that could cost as much as $500 billion, and which he hopes will create or save 2.5 million jobs over a two-year period.

Bush administration to spend $800 billion to buy up debt linked to home mortgages

The outgoing administration of President George Bush has also announced plans to spend up to $800 billion to buy debt linked to home mortgages, and to spur consumer lending.  The U.S. Congress earlier approved a $700 billion  bailout fund to help banks and other financial companies.

Treasury Secretary Henry Paulson said the new plan will encourage financial institutions to increase lending to consumers and small businesses.

By buying mortgage-related debt, the government also hopes to provide relief to the ailing housing industry.  A wave of home foreclosures and mortgage defaults triggered the current credit freeze and the broader economic slowdown.

Obama instructs economic team to curb government spending

Mr. Obama is also proceeding with a plan to trim government spending.  He said he will direct his economic team to go through the federal budget to find unnecessary or outdated  government programs that can be eliminated to save costs.

The President-elect has also said bank executives should do without annual bonus payments, to show they recognize the struggle that many Americans are going through because of the economic crisis.

In an interview with ABC news scheduled to air later Wednesday, Mr. Obama said executives who are already worth tens of millions of dollars should show they are willing to make some sacrifices.

The government has provided billions of dollars in recent months to help large financial companies.

Report finds reduction in Gross Domestic Product

New reports will be issued Wednesday that will provide a glimpse into the state of U.S. manufacturing, consumer sentiment, employment and home sales.

On Tuesday, a government report showed the measure of all goods and services produced in the United States (the Gross Domestic Product, or GDP) shrank by one-half of one percent between July and September.   The report is one of the latest signs that the U.S. is facing a serious economic downturn. 

Some information for this report was provided by AFP, AP and Reuters.