Barack Obama, who has won Tuesday's US presidential election, will inherit a series of economic problems on a scale not seen since the Great Depression in the 1930s.

The US economy, struck by the current financial crisis, contracted in the third quarter of this year at an annual rate of 0.3 percent, signaling the country is likely heading into a recession.

The contraction came as nervous consumers cut back on their spending by 3.1 percent, the biggest amount since the second quarter of 1980.

It marked the first drop in consumer spending, which accounts for two thirds of overall economic activity, since late 1991, when the economy was coming out of a recession.

A recession is under way, but "it's too early to talk about the depth of the downturn," said economist Victor Zarnowitz of the New York-based Conference Board, who serves on the NBER committee, which identifies recessions.

"Some further credit tightening would tip us over into a more severe recession, but it is too early to tell," he added.

Many economists believe that new coming president's biggest challenge will be navigating a deep and potentially prolonged economic downturn.

"We know the challenges that tomorrow will bring are the greatest of our lifetime -- two wars, a planet in peril, the worst financial crisis in a century," warned Obama late Tuesday when claiming his election win.

"There are mothers and fathers who will lie awake after their children fall asleep and wonder how they'll make the mortgage, or pay their doctor's bills, or save enough for college," he said.

"There's no president in recent history that's had so many crisis to deal with ... This president's going to have his hands full," said Leon Panetta, chief of staff to the last Democratic president, Bill Clinton.

"The one good thing about the next presidency is, there's no place to go but up," he joked.

Like Franklin Delano Roosevelt and Ronald Reagan, the new president will get a rare opportunity to leave a sweeping and long-lasting imprint on the US economy.

To save the economy from a possible severe recession, Obama has supported a second stimulus package worth about US$150 billion, though some outside economists are urging them to consider twice that amount.

The package will includes government spending on public infrastructure, aid to local governments and greater aid to the unemployed and those on food stamps.

Some economists believe the such a new stimulus package would have little effect in the current quarter, while some supporters say it will help pull the economy out of a recession earlier next year and perhaps mitigate the downturn.

Though a recession will likely dominate Obama's agenda, other short- and long-term economic challenges will also feature high on the to-do list, economists and advisers to both candidates said.

Obama has promised to revamp regulations governing Wall Street, work to bring down the costs of health care, boost indigenous energy sources, and fight climate change by setting caps on carbondioxide emissions for big industries.

"To rebuild that middle class, I'll give a tax break to 95 percent of workers and their families," he wrote in an article published by The Wall Street Journal recently. "If you work, pay taxes, and make less than US$200,000, you'll get a tax cut," while the wealthy people who earn more than US$250,000 a year, will pay more taxes.

Obama said the reforms will help create two million new jobs by "rebuilding our crumbling infrastructure and laying broadband lines that reach every corner of the country."

"I'll invest US$15 billion a year over the next decade in renewable energy, creating five million new, green jobs that pay well, can't be outsourced, and can help end our dependence on Middle East oil," he outlined.

Obama is likely to create a vastly larger economic role for the government and he will also permanently alter the relationship between financial markets and Washington, finish the job of reshaping the US banking system, said the US media.

"The next president is going to have to have two financial SWAT teams," said Barry Eichengreen, professor of economics and political science at the University of California, Berkeley.

"One to stabilize the crisis and staunch the bleeding, the other to focus on the issue of how to sustain long-run economic growth," he said.

Obama also knows the difficulty. "The road ahead will be long. Our climb will be steep," he said late Tuesday, while assuring his supporters he will make the success.

"We may not get there in one year or even one term, but America-- I have never been more hopeful than I am tonight that we will get there. I promise you -- we as a people will get there," said the first black president in the United States.