Many pundits hope that Mr Obama can craft a package that pushes money into the economy quickly, encouraging the idled gears of consumer spending to start cranking again.

A House aide has said the package could be on the order of $500 billion. Mr Obama hasn't shown his hand so far, but on Friday, responding to the jobs report, said there were 'no quick or easy fixes' on the horizon.

House of Representatives Speaker Nancy Pelosi, a California Democrat, has said the plan is to have something on Mr Obama's desk by the time he takes office.

'The rapidly worsening job situation significantly increases the probability of President-Elect Obama proposing a $500 billion to 700 billion fiscal stimulus package,' said Mr Mohamed El-Erian, who helps oversee $830 billion in assets as chief executive at the bond fund PIMCO.

A half-point cut would take overnight interest rates to their lowest level on records dating to July 1954.

'We doubt that action will hasten an economic recovery. Traditional monetary policy is essentially impotent in this situation,' said Mr Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

Fed officials have said they will consider alternative steps to stimulate the economy, as rates are already approaching zero and the data stream only continues to worsen.

Many analysts now expect the central bank to set rates at zero at its subsequent meeting in January and then push full-bore into 'quantitative easing', flooding the economy with cash in an effort to spur spending.

'The outlook has clearly deteriorated ... we need to make policies appropriately accommodative,' Chicago Federal Reserve Bank President Charles Evans said on Thursday.

Mr Bernanke said the Fed could buy long-term Treasury bonds and debt issued by government-sponsored housing finance companies, which could lower mortgage costs.

The Fed could also pump funds directly into specific credit markets, as it has been doing for the commercial paper market that many corporations tap to fund day-to-day operations.

Since September, the Fed has ballooned the size of its balance sheet to over $2 trillion from about $800 billion to provide liquidity to strained financial markets, and it could continue to do so for now.

The Fed could also make an explicit commitment to keeping interest rates low for a foreseeable period - another way to push down longer-term interest rates.

For more background on the Fed's tools, see

The Federal Deposit Insurance Corporation has crafted a plan to modify about 2.2 million home mortgage loans, complete with financial incentives for mortgage services to modify loans and set affordable monthly payments for homeowners.

The FDIC, with support from many Democratic lawmakers, has called on the Treasury Department to fund that plan under a $700 billion financial rescue fund. The Treasury, however, has said the fund is only for investments, not subsidies.

For its part, the Treasury has said it is considering a number of proposals. According to sources, one plan would aim to set rates for newly originated 30-year mortgages at a rock-bottom 4.5 percent - a move some pundits say falls short of providing a full solution to the nation's housing ills.

'The irony here is that the homeowners who most need help, those facing foreclosures, defaults, or resets of their loans, would be shut out of this program,' said Mr Kurt Eggert, a law professor at Chapman University School of Law in Orange, California.

Mr Bernanke on Thursday suggested other measures to help out the housing market, including write-downs of loan principal. As many as 20 per cent of home borrowers might be under water on their mortgages - oweing more principal than their homes are worth - he said. -- REUTERS