President-elect Bush and his team are actually talking down our economy, (and) injecting more fear and anxiety

Gene Sperling Clinton economic advisor

His remarks followed accusations made by Democrats and economists that Mr Bush and his staff were attempting to "talk down" the economy for political ends.

Some commentators suggest Mr Bush is seeking to bolster the case for his proposed $1.3 trillion tax cut and to pin the blame for any further economic downturn firmly on the outgoing administration.

"What you're seeing is President-elect Bush and his team actually talking down our economy, (and) injecting more fear and anxiety into the economy than is justified," said Gene Sperling, an economic advisor to President Clinton.

'Straight talk'

Mr Bush denies these accusations, arguing that his team is merely offering a necessary "straight talk" about the economic situation.

Vice President-elect Cheney: "We don't want to talk down the economy"

"I think people are going to find out that when I am sworn in as president, I'll be a realist. And if there are warning signs on the horizon, we need to pay attention to them," he said.

However, Vice President-elect Dick Cheney appeared to tone down his rhetoric on Thursday, having previously warned that the United States might be on the "front edge of a recession".

"We don't want to talk down the economy, clearly, and I think both President Bush and I have tried to be cautious in that regard," he said.

Downward spiral

Analysts agree that the US economy has slowed in recent months, but some warn that the Bush team risks turning a dramatic downturn into a self-fulfilling prophecy.

George W Bush's father presided over the last recession

They say negative comments, which they believe have caused the markets to fall sharply this week - can often feed on themselves.

"Clearly they have a political incentive to shift the blame or to put the blame, if a recession there is to be, on the outgoing (Clinton) administration," said economist Wayne Ayers.

"He does not want the Bush family to be the bookends, so to speak, on 10 years of prosperity," he added, referring to the recession that ended in 1991 under George W Bush's father.

Independent economic consultant Douglas Lee called Mr Bush's comments "disingenuous" and warned that tax cuts would do little to stave off a recession should the economy fall further.

Cabinet preparations

On Thursday Mr Bush formally resigned as governor of Texas to concentrate on preparing his cabinet team.

His latest appointments include Paul O'Neill, the chairman of the giant aluminium company Alcoa, as treasury secretary and Don Evans as commerce secretary.

Mr Bush has also named Ann Veneman as agriculture secretary, and former Cuban refugee Mel Martinez as housing secretary.

Other leading Republicans tipped for positions yet to be announced include former Republican Senator Dan Coats as the next defence secretary.