By Anne Davies and Washington
PRESIDENT Barack Obama warned he would be a one-term president if he failed to engineer a significant turnaround in the US economy within three years.
He made the comment as he began negotiations with the Senate over the $US900 billion ($A1400 billion) stimulus package and more data showed the US economy was continuing to deteriorate.
"If I don't have this done in three years, then there's going to be a one-term proposition," he said during an interview with NBC Today show host Matt Lauer.
Mr Obama said that "people are going to see that we're starting to make progress", but he also warned that the stimulus bill was urgent and further bank collapses were likely, even with further measures to stabilise the banking system.
Mr Obama's likely steps to stabilise the banking system came as there were further signs the US economy is continuing to contract.
US consumer spending fell 1 per cent in value terms in December, or 0.5 per cent, after adjusting for falling prices, which tumbled 0.5 per cent as retailers discounted and the price of petrol fell. It was the sixth monthly fall in seven months.
US department store Macy's said on Monday that it would lay off 7000 workers, while Chrysler is offering payouts to its blue-collar workforce.
The prospect of finding an alternative job is getting more remote every day.
In Miami-Dade County, more than 1000 people lined up on Sunday night to lodge applications for 35 positions as firefighter/paramedics.
Former House speaker Newt Gingrich said on Monday that the US economic downturn was much worse than political leaders admit and predicted the recovery would take three to five years.
The financial meltdown pointed to "a much more profound problem than people think" because American industries and education had lost ground to China and India, Mr Gingrich said.
More poor employment data is expected tomorrow, when the weekly figures come out.
Mr Obama is also facing an increasingly fractious Senate.
Two Republicans — John McCain and minority leader Mitch McConnell — put forward detailed suggestions of changes to the stimulus package, which will be voted on later this week.
"Now is the time to sit down and take into consideration the ideas that we have, particularly on things like tax cuts," Senator McCain said.
"We should have payroll tax cuts; we should be having incentives for people to stay in their homes. We need to eliminate a lot of the wasteful pork-barrel spending that's been put in and have a real meaningful stimulus package."
Senator McConnell said the package was too large and that the Republicans wanted to prune it.
He wants an amendment to give government-backed, low-interest loans to home owners — a revision that he says will increase the demand for houses and boost the average household income.
"We believe that a stimulus bill must fix the main problem first, and that's housing," Senator McConnell said on Monday.
He said there were also several Democrat senators who were perturbed by the package.
Mr Obama met with the Democratic caucus late on Monday to discuss possible changes to the stimulus plan, but few details of what was said emerged.