CHICAGO - PRESIDENT-ELECT Barack Obama chose a former Federal Reserve chairman on Wednesday to head a board of economic experts to advise him, in his latest bid to reassure nervous consumers and financial markets that he will bring swift economic relief as president.

Mr Paul Volcker will head the new White House panel to help create jobs and bring stability to the ailing financial system.

Mr Obama also said his Cabinet would 'combine experience with fresh thinking' and pushed back against criticism that he was recycling former Clinton administration officials as he builds his new economic team.

Mr Volcker, 81, will head the President's Economic Recovery Advisory Board. The board's top staff official will be Austan Goolsbee, a University of Chicago economist who has never worked in Washington, Mr Obama said at a news briefing.

Mr Obama said he wants the new economic panel to provide outside voices for his administration.

'The walls of the echo chamber can sometimes keep out fresh voices and new ways of thinking,' Mr Obama said.

'You start engaging in group-think.' Volcker is no stranger to economic crises. He became Fed chairman in 1979, a time of high inflation and high unemployment. He helped tame inflation by raising interest rates, a move that helped plunge the economy into recession.

He was later credited with reviving the economy by getting inflation under control. Mr Volcker served as Fed chairman until 1987.

He returns as an adviser with the nation facing increasing unemployment, a growing federal budget deficit and a financial system in turmoil.

'He pulls no punches,' Mr Obama said of Mr Volcker. 'He seems to be fairly opinionated.'

It was Mr Obama's third news conference in as many days dealing with the economy. On Monday, he announced New York Federal Reserve President Tim Geithner as his treasury secretary and named several other top economic advisers.

He also announced plans for a massive economic stimulus plan that Democrats have said could cost as much as US$700 billion (S$1 trillion).

'I was elected with the charge of getting this economy back in shape,' Mr Obama said on Wednesday.

'We are going to implement starting day one when I come into office.' Fifty-five days before his inauguration, Mr Obama defended his selection of former Clinton officials to help run his administration. Geithner was a Treasury Department official during the Clinton administration, and Mr Lawrence Summers, who will head Mr Obama's National Economic Council, was Mr Clinton's treasury secretary.

Other Clinton administration names include Mr Eric Holder, who will be Mr Obama's attorney general, and Mr Rahm Emanuel, the president-elect's chief of staff.

'The American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever,' Mr Obama said.

'What we are going to do is combine experience with fresh thinking,' he said.

'But understand where the vision for change comes from. First and foremost, it comes from me. That's my job, is to provide a vision in terms of where we are going and to make sure then that my team is implementing.'

On Tuesday, Mr Obama introduced Congressional Budget Office Director Peter Orszag as his candidate to run the White House Office of Management and Budget.

The president-elect also pledged a 'page-by-page, line-by-line' budget review to root out unneeded spending.

His economic team largely complete, Mr Obama was expected next week to introduce national security officials, including Mrs Hillary Rodham Clinton as his secretary of state.

Aides said the New York senator had not yet formally accepted the offer, but transition officials have indicated that the nomination is on track.

Mr Obama also was expected to announce he had asked Defence Secretary Robert Gates to remain at the Pentagon for a year. Mr James Jones, a former Marine Corps commandant and Nato commander, was Mr Obama's pick to be national security adviser.

At his news conference on Tuesday, Mr Obama set no goals for reducing the federal deficit - now in record territory and headed ever higher.

On Monday, he announced plans for a massive economic stimulus plan that Democrats have said could cost as much as US$700 billion.

In an interview for ABC television to air on Wednesday, Mr Obama suggested that bank executives forgo their bonuses this year to show they are taking responsibility amid difficult economic times.

According to excerpts of the interview released by ABC, Mr Obama said bank executives should make sacrifices because so many other people are struggling as the US economy slips further.

Some financial firms, including Goldman Sachs, the Swiss bank UBS and the British bank Barclays, have said they are not handing out annual bonuses to top executives, and Mr Obama encouraged more to follow.

Mr Obama also said the heads of the three auto companies who came to Washington asking for a bailout are a 'little tone deaf' to what's going on in the country.

It was the second time this week he has had harsh words for Ford Motor, Chrysler LLC and General Motors. The struggling companies are pressing Congress for US$25 billion in government loans.

Many economists think that aid to state and local governments should be tops on the agenda for any new stimulus spending, as they have less borrowing authority than the federal government and must slash budgets as the slowdown causes tax revenues to fall.

Mr Obama said his new economic panel will include people from business, labour and academia.

'I hope that everybody understands that we are going to be able to get through these difficult times, but we're just going to have to make some good choices,' Mr Obama said.

'I was elected with the charge of getting this economy back in shape but also making sure that it's working on behalf of middle-class families.'

After the press conference, Mr Obama and the soon-to-be first family handed out food to the needy at a Chicago church on the day before Thanksgiving, the US harvest holiday. -- AP