As top White House economic adviser Larry Summers announced he is quitting to return to academia, President Barack Obama faces growing pressure to revive the sluggish US economy.
Republicans have criticised Summers handling of the economic crisis while some on the left of the Democratic Party felt he was too cosy with Wall Street.
Experts said Obama will have a tough time finding someone of Summers’ stature to replace him.
On the same day that Summers said he will leave at the end of the year to return to Harvard, the Federal Reserve inched closer to further stimulus measures to help the world’s biggest economy recover as Fed policymakers expressed stronger concerns about low inflation.
Many big banks believe an announcement on pumping hundreds of billions of new dollars into the US economy could come as soon as November.
The housing slump continues there – new figures showed demand for mortgages remains weak and single-family home prices fell for a second straight month in July.
The Federal Housing Finance Agency’s house price index dropped by a seasonally adjusted 0.5 percent after declining by a revised 1.2 percent in June, much worst than the previously reported 0.3 percent fall.
Loan applications to buy homes and refinance declined for a third straight week even though fixed mortgage rates are near all-time lows.
The US housing market has been whip-sawed by a surge in demand before, and a plunge in demand after tax credits for new home buyers ended on 30th April.
The market is now entering a seasonally slower period, when sales typically reduce after the school year begins and winter approaches.