The US economy now faces the most difficult period since the Great Depression, President Barack Obama warned shortly before he took office. Only days after the inauguration, Congress has begun to debate the American Recovery and Reinvestment Plan, with which the President hopes to rejuvenate the ailing economy and return America to prosperity.

1. Tax cuts

President Obama made tax relief for ordinary Americans a keystone of his electoral campaign; hoping to boost consumer spending with a one-off tax cut for working families. This in turn will revitalize the retail sector and inject more cash into a dangerously stagnant economy, as well as soothing the Republican side of the House as his legislation makes its way through Congress.

2. Stability in the banking system.

The collapse of Bear Stearns, Washington Mutual and other financial institutions has hit the confidence of the US public hard. Government action is now being taken to prevent further disorder in the banking system. New funds available to Bank of America should ease the pressure caused by its acquisition of Merrill Lynch.

Banks should not however expect a free ride under President Obama. In his inaugural address he made sharp criticism of the "greed and irresponsibility" which has led America to its current economic problems and warned that change must come.

3. Obama on Honeymoon

New presidents enjoy an unprecedented period of goodwill from the public as they place their first stamps of authority on Capitol Hill. In the last days of George W Bush's time in power, his approval ratings reached a record low of 25%, compared to Obama's inaugural approval of 83%. It's plain that the public support Obama's economic policies, making it less likely his bills will be hamstrung in Congress.

4. Long term plans on energy.

Obama plans to make the vast majority of federal buildings more energy efficient, cutting fuel bills and saving public money. He will extend this modernization to two million American homes, helping the public save money on heating and light. He will double the production of energy from alternative and renewable sources; lessening the American dependency on oil from volatile areas of the world and creating jobs in research and development.

5. Rescue of the automotive sector

In December, the Government injected loans of $17.4 billion to the automotive sector, saving Chrysler and General Motors from possible collapse and avoiding thousands or even millions of potential job losses. With the car manufacturing sector of vital importance to many blue-collar areas, keeping public confidence in the sector is critical.

6. We, the People

In contrast to his predecessor, Barack Obama made his name working for the ordinary people of Chicago. He understands the needs and concerns of Middle America and has promised to concentrate on improving the lot of the public rather than allow business to dictate policy.

7. More regulation for the banks

It's plain to most commentators that the sub-prime housing market should never have been allowed to grow to such a bloated state. Obama has announced greater regulation and oversight for the financial sector, which should prevent a repeat of the sub-prime bubble.

8. Fast action

Obama has been quick to act on implementing his proposed reforms. Of the $825 billion he hopes to earmark for economic recovery, 80% is planned for release in the first 18 months of his presidency.

Aiming to have his package for economic recovery pass Congress by mid-February, he has made a quick start on tackling the problems of the economy.

9. Job creation

Taking a leaf out of Franklin Roosevelt's book, Obama plans to safeguard existing jobs and create new ones through new long-term infrastructure projects. FDR's "alphabet soup" agencies and public works projects in the Depression showed that public works agencies can not only kick-start the earning power of millions of families; they improve life in the post-recession world.

10. Caution on the deficit

Obama is well aware that a high budget deficit is unsustainable. The independent Congressional Budget Office estimates the Obama's recovery plans will cost $1.2 billion in the first year, but others argue that the full cost could be closer to $2 trillion. The new government is however keen to keep costs under control. Health Secretary Tom Daschle has stated the healthcare reforms Obama plans to implement will be subject to tight cost controls, and Obama himself has voiced concern over the long term future of the country's deficit.

Barack Obama's recovery plan for the US economy provides for $550 billion of additional federal expenditure and $275 billion in tax cuts; $185 billion of it going to individuals.

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This post is guest-blogged by Lydia Malings.