President Barack Obama announced a bipartisan commission on Thursday to tackle mounting U.S. federal budget deficits that economists say imperil the nation's economic future.  The president acted to correct America's long term fiscal imbalances while short term economic signals point to a bumpy recovery after a deep recession.

President Obama says he inherited massive budget deficits and a staggering national debt when he entered office, and that he has had to incur even more debt to combat a financial crisis and prevent a prolonged economic recession from becoming a depression.

But he is quick to add that deficit spending is unsustainable.

"Without action, the accumulated weight of that structural deficit, of ever increasing debt, will hobble our economy," Mr. Obama said. "It will cloud our future and it will saddle every child in America with an intolerable burden."

Mr. Obama spoke at the White House, where he signed an executive order creating a bipartisan commission that will craft solutions to bring federal spending in line with tax receipts.

Standing behind the president were the two men who will lead the panel - Democrat Erskine Bowles, who served as White House chief of staff during the Clinton administration, and former Republican Senator Alan Simpson of Wyoming.

"I am asking them [Erskine and Simpson] to produce clear recommendations on how to cover the costs of all federal programs by 2015 and to meaningfully improve our long term fiscal picture," Mr. Obama said.

More than half of federal spending goes to so-called entitlement programs such as Social Security for retirees, and medical subsidies for the poor and the elderly.  Cutting such programs is politically unpopular.

National defense consumes another large portion of the budget, and is difficult to rein in during a time of war.

President Obama has proposed a freeze on the remainder the federal budget, beginning next year.  But a limited freeze along will not eliminate a deficit that exceeded $1 trillion last year and is projected to do so again this year.

Congress rejected creating a budget commission of its own that would have been empowered to draft fiscal solutions and to compel the legislature to consider its recommendations.   

Meanwhile, fresh signs of weakness emerged in the U.S. labor market that analysts say point to a slow economic recovery.  The number of newly-laid off workers filing for unemployment benefits stood at 473,000 last week - 31,000 more than the previous week.

Global Insight chief economist, Nariman Behravesh:

"After substantial progress in fixing or at least improving the jobs situation, we seem to have backtracked a little bit," Behravesh said. "This is not so unusual.  When you reach a turning point [in the economy after a recession], the progress is not uniform - two steps forward, one step back.  And I think that is what we are seeing - the one step back."

At the same time, a broad measure of future economic vitality, the Conference Board's Index of Leading Economic Indicators, rose for the 10th consecutive month, but at a slower pace than in previous months.  And spiking energy costs caused U.S. wholesale prices to rise 1.4 percent in January - double what many economists had anticipated.