The US President-elect Barack Obama named Paul Volcker, the former Federal Reserve chairman, to a panel that will advise on how to pull the US economy out of recession, amid more signs that the downturn is accelerating.

Economic data yesterday showed that business investment in durable goods has fallen sharply; the housing market continues to languish, and consumer spending has contracted at its fastest rate for seven years. Meanwhile, the upscale retailer Tiffany's painted a gloomy outlook for the holiday shopping season.

The new Economic Recovery Advisory Board will draw members from academia and business as well as from government, Mr Obama said. “Sometimes policy making in Washington can become a little bit too ingrown, a little bit too insular. The walls of the echo chamber can sometimes keep out fresh voices and new ways of thinking.”

It was Mr Obama's third announcement in as many days, aimed at reassuring markets that there is no power vacuum or policy drought during the transition between presidents. Austan Goolsbee, the University of Chicago economist who is Mr Obama's longest-serving economic advisor, will also serve on the board, which will be charged with coming up with ideas to pull the US economy out of its funk. Wall Street is predicting GDP will contract by between 3 and 5 per cent in the fourth quarter of this year.

Orders for durable goods fell at an annualised rate of 6.2 per cent in October, harder than predicted. The decline was the third monthly fall in a row, coming on the heels of a decline of 0.2 per cent in September — a revised figure, which compared to an earlier calculation that showed a gain.

Particularly gloomy for the economy, the Commerce department's report showed that nervous businesses have been scaling back their investment. Orders for non-defence capital goods excluding aircraft, plunged by 4.0 per cent, on top of a 3.3 per cent in September. Optimists, though, pointed to the sharp decline in mortgage rates that continued yesterday, a day after the Federal Reserve announced it would spend $600bn buying mortgage-related securities in the secondary market.