Mr President – Welcome with a Stimulus Program!

Who ever is the 44^th US president – be it Obama or McCain, the winner will face a daunting task. The recession in deepening, major parts of the financial market remain in intensive care while the government’s balance sheet is deteriorating by days.

The faster pace of economic contraction is certain and the extent to which the financial and economic crisis has damaged household attitudes was revealed in last week’s record-low consumer confidence and continued labour market deterioration.

While credit conditions backed by the extraordinarily aggressive efforts of leading governments and central banks are showing tentative signs of improvements, the still falling housing prices will likely limit the gains for now.

It wouldn’t surprise me if a second fiscal stimulus package will emerge soon after the election. Underlying the intensity of the current episodes, the Fed eased 50bps last week and signaled a willingness to cut further, citing declining consumer expenditures, weakening business equipment spending and industrial production.

Early this year, the US government has approved a US$168 billion economic stimulus plan, including taxpayer rebates and business tax breaks. This time around, the program could be larger than the previous amount, including several provisions to help the housing market, which would include bonds that would allow states to help homeowners facing foreclosure.

The chairman of the Federal Reserve, Ben Bernanke, said that he supported a second round of additional spending measures to help stimulate the economy. I am working with numbers of US$200-300bn package of spending. The drumbeat for lawmakers to do more to boost the economy is growing louder. And the chances have increased that Congress could pass a second stimulus package during its lame-duck session following the presidential election.