Obama admits economy is the biggest challenge

Washington: US president-elect Barack Obama pointed to Friday's release of unemployment figures and bad news from auto industry as the reason that his administration will have to move quickly on the economic crisis.

"We are facing the greatest economic challenge of our lifetime and we are going to have to act swiftly to solve it," Obama said in his first news conference since his election.

Before the press conference, Obama and Biden met with a 17-member council of economic advisers.

Among the panellists were former Treasury Secretaries Lawrence Summers and Robert Rubin, former Fed Chairman Paul Volcker, billionaire businessman Warren Buffett and other leaders in business and politics.

The Labour Department's monthly jobs report on Friday morning showed that the economy shed 240,000 jobs in October, bringing the year's total job losses to 1.2 mln. The unemployment rate climbed from 6.1 per cent to 6.5 per cent, the highest it has been since March 1994.

Also on Friday, General Motors Corp, the nation's largest automaker, reported a huge loss that was much worse than expected and warned it's in danger of running out of cash in the coming months. GM said it lost $4.2 bln, or $7.35 a share, excluding special items.

Ford Motor Co. also reported a $3 bln operating loss in the latest quarter on Friday and said it would reduce staff and capital spending to preserve its dwindling cash.

"This is one of the first times that I can remember that the secretary of the treasury is going to be almost as important as the secretary of state," said CNN senior political analyst David Gergen, who served in the Reagan and Clinton administrations.

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Earlier on Friday, a source involved in the Cabinet gathering process said Obama is considering a mix of Washington insiders and high-profile business executives to head Cabinet positions.

Obama has not made any statements on possible Cabinet personnel, but the source said a mix of high-profile names were under consideration.

Interest in the makeup of Obama's economic team also is high as bad news emerges daily. Names circulating for the treasury secretary position include Timothy Geithner, Summers and Volcker.

For secretary of state, Sen. John Kerry, D-Massachusetts, is high on the list, said the source involved in the process. Sen. Christopher Dodd of Connecticut, a former presidential candidate who later endorsed Obama in the Democratic primaries; New Mexico Gov. Bill Richardson; and former UN Ambassador Richard Holbrooke also are interested in the job, the source said.

For defense secretary, indications are the current defense chief, Robert Gates, will stay "for a certain period," the source said. Gates, the former CIA director under President George H.W. Bush, has received bipartisan praise for his leadership at the Pentagon in the last two years.

Arizona Gov. Janet Napolitano is said to be a "very real possibility" for US attorney general, the source said. Napolitano, a former attorney general in her state, was named earlier this week to the Obama transition team.

For secretary of commerce, Leon Panetta, former White House chief of staff in the Clinton administration; Time Warner Chairman Dick Parsons; Chicago businesswoman Penny Pritzker; and University of California economist Laura Tyson are all under consideration, according to the source.

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Geithner, president of the Federal Reserve Bank of New York, helped deal with Wall Street's financial meltdown earlier this year, overseeing the acquisition of Bear Stearns by JPMorgan Chase and the bailouts of American International Group Inc. and Lehman Brothers.

Summers was treasury secretary from July 1999 to January 2001 and the chief economist of the World Bank from 1991 through 1993. Before his career in government, he taught economics at Harvard University.

Volcker is a former chairman of the Federal Reserve, serving under Presidents Carter and Reagan. He also worked in the private sector as an investment banker and headed the investigation into the UN oil-for-food program for Iraq.

The White House is holding an economic summit of industrial and developing nations on November 15. Obama could delay naming his economic team to avoid interfering with the G-20 summit.

Obama on Thursday named US Rep. Rahm Emanuel of Illinois as his chief of staff.

The Office of the Chief of Staff oversees and coordinates activities and communication among various departments of the administration. Emanuel helped lead Democrats to majority control of the House of Representatives in 2006.

He was elected to the House in 2002 and is the fourth highest-ranking member of the chamber's Democratic leadership.

A source with the Obama transition team said a plan to name David Axelrod a senior adviser to the incoming president is "in the works."

Axelrod was the Obama campaign's chief strategist and was a top adviser to Obama during his run for the Senate in 2004.

Observers believe Robert Gibbs, the communications director for Obama's presidential campaign, will become the presidential press secretary.

Obama was considering who will be on his team long before Tuesday's election.

He also could pick Republicans such as Sens. Chuck Hagel or Dick Lugar to come on board, analysts speculate.

Hagel, R-Nebraska, is a Vietnam War veteran and fierce critic of the Bush administration's handling of the Iraq war. Hagel did not run for re-election for his Senate seat this year.

Lugar, R-Indiana, is minority leader of the Foreign Relations Committee and worked with Obama last year to expand a program aimed at destroying weapons of mass destruction in the former Soviet Union.

Obama won the presidency with 364 electoral votes -- nearly 100 more than needed. On Friday, CNN projected Obama the winner in North Carolina, which has 15 electoral votes.