Bush, Paulson say U.S. rebound will take time

Broader stock indicators also declined. The Standard & Poor's 500 index fell 4.6 percent and the Nasdaq composite index fell 3.6 percent.

Beyond stocks, the credit markets have been showing tentative signs of recovery, though they remain strained, and demand for safe assets remains high. The three-month Treasury bill's yield slipped on Wednesday. Low yields show that investors are willing to earn meager returns as long as their investment is preserved.

Key lending rates between banks in the U.S. and Europe inched down, after major central banks offered the banking sector unlimited amounts of short-term loans in dollars. This was meant to keep credit markets flowing while lenders regain confidence in the interbank lending system and came on top of government rescue packages. Across different national plans, European governments and the United States have over the past several weeks committed some $3 trillion to bank guarantees, equity injections and other assistance.

Sales at U.S. retailers fell with a thud in September, dropping by 1.2 percent, the most in three years. Uncertainty about the economy -- and their own financial fortunes -- probably will force consumers and businesses alike to hunker down further, spelling more problems for the already troubled economy.

Another report showed that wholesale prices dropped for the second straight month, as energy costs retreated from record highs. Yet many other prices are up sharply over the past year and are squeezing businesses. When energy and food prices are stripped out, all other wholesale prices tracked racked up their biggest annual increase in more than 17 years.

Anxiety about the economy is the No. 1 concern of voters. With the presidential election just weeks away, Democrat Barack Obama and Republican rival John McCain are working furiously to convince people that each is the best choice to steer the economy through these perilous times.

Many economists believe the U.S. is on the edge of -- or already in -- its first recession since 2001.

If the government's new plan works -- it will merely cushion the blow. Democratic lawmakers are pushing for another round of stimulus that could cost as much as $150 billion, an effort to provide additional relief and lift the country out of the doldrums.

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Associated Press writers Pan Pylas in London, Madlen Read and Patrick Rizzo in New York and Deb Riechmann, Christopher S. Rugaber and Martin Crutsinger in Washington contributed to this report.



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