In reality, there may not be much he can do to speed up growth and employment.
Obama edged out Republican Mitt Romney in the race for the White House on Tuesday, a victory made more difficult by voter frustrations over the sluggish pace of the economy's recovery and worries about sky-high public debt.
The president's best chance to kick-start faster growth is to remove the recession threat posed by the US$600 billion (S$733 billion) in tax hikes and government spending cuts known as the "fiscal cliff,"which is already weighing on business investment decisions.
And all the better if he can do that in concert with securing a longer-term deal that puts the budget on a more sustainable path - a tall order given the still-divided nature of Washington politics.
"Obama will have to nail down some of these fiscal issues in order to get the economy moving quickly," said Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania."If he is unable to do that, we're going to be stuck."
The world's largest economy has struggled to achieve anything like strong growth since climbing out of the deep 2007-09 recession.
Annual gross domestic product expanded by an average of just 2.1 per cent over the last two years.
Only about 4.5 million of the 8.7 million jobs lost during the downturn have been recouped. About 23 million Americans are either unemployed or underemployed, many of them having to settle for part-time work.
Not only is government borrowing at an unsustainably high rate, with a debt now towering over $16 trillion, but the recession left lasting scars on the labour market that is likely to keep unemployment elevated for years to come.
What's more, growth is slowing overseas, crimping US exports.
POLITICAL GRIDLOCK REMAINS
While Obama's Democrats retained control of the Senate, Republicans kept their grip on the House of Representatives, maintaining Washington's political gridlock.
During his first term, Obama was unable to bridge the divide between the two parties over how to trim the budget deficit and there is little to suggest it will be easier this time around.
He has called for slashing the deficit by more than US$4 trillion over a 10-year period through raising taxes for wealthy Americans and cutting defence spending, two steps that are unpopular with Republicans.
"Dealing with partisanship and gridlock in Congress will remain a major challenge, today's election result certainly does not make the situation any easier," said Harm Bandholz, chief US economist UniCredit Research in New York.
Full implementation of Obama's deficit-cutting plan would dent growth in 2013, and some economists expect he would offer some form of tax relief for households to soften the blow.
LEGACY OF A CRISIS
Even if Obama manages to strike a deficit deal with Congress, it would likely add only a few tenths of a percentage point to economic growth given that it would not address the main problem holding the recovery back: the massive loss of wealth during the recession.
Median family net worth dropped 38 per cent between 2007 and 2010 as housing prices plummeted, the biggest decline for any period on record, and almost 11 million Americans are estimated to owe more on their mortgages than their homes are worth.
In addition, many of the jobs lost during the recession, particularly in construction and other housing-related areas like finance, may never come back. That could leave much of the US workforce lacking the skills employers need.
"The job situation is going to be problematic because my reading is the unemployment we suffer is to some large degree structural," said Adolfo Laurenti, deputy chief economist at Mesirow Financial in Chicago. "Even a strong economy will have a hard time reducing the employment rate to below 7 per cent."
The jobless rate stood at 7.9 per cent in October.
The economy is also being buffeted by the debt crisis in Europe and cooling demand in China, which has undermined demand for US businesses. Exports had accounted for about a third of growth since the recession ended.
"We are in a globalised economy with no healthy global engine for economic growth. That's a problem that cannot be easily fixed by Obama," said Laurenti.
Obama wins re-election, makes history again
WASHINGTON - US President Barack Obama swept to re-election Tuesday, creating history again by defying the undertow of a slow economic recovery and high unemployment to beat Republican foe Mitt Romney.
Obama became only the second Democrat to win a second four-year White House term since World War II, when television networks projected he would win the bellwether state of Ohio where he had staged a pitched battle with Romney.
"This happened because of you. Thank you," Obama tweeted to his 22 million followers on Twitter as a flurry of states, including Iowa, which nurtured his unlikely White House dreams suddenly tipped into his column.
With a clutch of swing states, including Florida and Virginia still to be declared, Obama already had 275 electoral votes, more than the 270 needed for the White House and looked set for a comfortable victory.
There was a sudden explosion of jubilation at Obama's Chicago victory party as the first African American president, who was elected on a wave of hope and euphoria four years ago, booked another four years in the White House.
Romney's aides had predicted that a late Romney wave would sweep Obama from office after a single term haunted by a sluggish recovery from the worst economic crisis since the 1930s Great Depression and high unemployment.
But a huge cheer rang out at Obama headquarters when television networks projected Obama would retain Pennsylvania and its 20 electoral votes, and the party grew wilder as they called Wisconsin and Michigan.
The mood at Romney headquarters in Boston however had grown subdued throughout the evening as partisans stared at their smart phones.
Disappointed Republicans were seen leaving what had been billed as a celebration of Romney's expected triumph in central Washington.
Defeats in New Hampshire, where Romney has a summer home and Wisconsin, the home of Republican vice presidential nominee Paul Ryan were especially sickening for Republicans.
Early signs were that the election, while a building triumph for Obama would do little to ease the deep polarisation afflicting US politics, as Republicans racked up huge margins in safe states, though struggled in battlegrounds.
Exit polls appeared to vindicate the vision of the race offered by Obama's campaign, when top aides predicted that Obama's armies of African American, Latinos and young voters would come out in droves.
Polls also showed that though only 39 per cent of people believed that the economy was improving, around half of Americans blamed President George W. Bush for the tenuous situation, and not Obama.
The president, who made history by becoming America's first black president after a euphoric victory, carved a new precedent on Tuesday by defying the portents of a hurting economy to win a second term.
He awaited his fate in his hometown of Chicago, while Romney, a multi-millionaire former investment manager and Massachusetts governor was laying low in a hotel in Boston awaiting results.
As expected, television networks projected that Republicans would win the House of Representatives.
Democrats clung onto the Senate, and retained a seat in Missouri, where Senator Claire McCaskill fended off a challenge by Representative Todd Akin, whose remarks about rape and abortion sparked national outrage.
Both presidential candidates had earlier marked time while voters dictated their fates.
Romney appeared caught up in the emotion of seeing his name on the ballot for President of the United States and also saw an omen in a huge crowd that showed up at a multi-story parking lot to see his plane land at Pittsburgh airport.
"Intellectually I felt that we're going to win this and I've felt that for some time," Romney told reporters on his plane.
"But emotionally, just getting off the plane and seeing those people standing there... I not only think we're going to win intellectually but I feel it as well."
While Romney penned his victory speech, Obama took part in his election day tradition of playing a game of pick-up basketball with friends, including Chicago Bulls legend Scottie Pippen, after visiting a campaign office near his Chicago home.
The president, who like a third of Americans voted before election day, congratulated Romney on "a spirited campaign" despite their frequently hot tempered exchanges.
"I know that his supporters are just as engaged and just as enthusiastic and working just as hard today. We feel confident we've got the votes to win, that it's going to depend ultimately on whether those votes turn out," he said.
"I think anybody who's running for office would be lying if they say that there's not some butterflies before the polls come in because anything can happen," the president added later in a radio interview.
CBS News, quoting early exit polls, said 39 per cent of people approached after they had voted said the economy, the key issue, was improving, while 31 per cent said it was worse and 28 saw it as staying the same.
Voters were also choosing a third of the Democratic-led Senate and the entire Republican-run House of Representatives. But, with neither chamber expected to change hands, the current political gridlock will likely continue.
The US presidential election is not directly decided by the popular vote, but requires candidates to pile up a majority - 270 - of 538 electoral votes awarded state-by-state on the basis of population.
A candidate can therefore win the nationwide popular vote and still be deprived of the presidency by falling short in the Electoral College.
The election went ahead in New Jersey with thousands of people without power, and large areas devastated by superstorm Sandy which roared ashore last week killing more than 100 people.
Adora Agim, an immigrant from Nigeria, said the chaos shouldn't stop voting. "I have lived in a Third World country where your vote does not matter.
It's nice to be somewhere where it matters," she said, in Hoboken, New Jersey. The central message of Obama's campaign has been that he saved America from a second Great Depression after the economy was on the brink of collapse when he took over from Republican president George W. Bush in 2009.
He claims credit for ending the war in Iraq, saving the US auto industry, killing Osama bin Laden, offering almost every American health insurance, and passing the most sweeping Wall Street reform in decades.
Romney sought to mine frustration with the slow pace of the economic recovery and argued that the president was out of ideas and has no clue how to create jobs, with unemployment at 7.9 per cent and millions out of work.
Rape row Republican loses Senate race in Missouri: Networks
WASHINGTON - Barack Obama's Democrats were on a path Tuesday to retain control of the Senate, holding on to a key seat in Missouri where the losing Republican candidate triggered a firestorm with comments about "legitimate rape."
Democratic Senator Claire McCaskill managed to fend off a challenge by Representative Todd Akin, whose remarks about rape and abortion sparked national outrage and prompted calls from his fellow Republicans to withdraw from the race.
Obama wins key state of New Hampshire: Networks
WASHINGTON - President Barack Obama defeated Republican challenger Mitt Romney in the crucial battleground of New Hampshire, US television networks projected on Tuesday.
The triumph for Obama could help pave his way to re-election and spelled worrisome news for Romney's bid for the White House, as his campaign had pushed hard to prevail in the northeastern state that carries four electoral votes.
Democrats pick up Senate seat in Massachusetts: Networks
WASHINGTON - The Democrats picked up a Senate seat Tuesday in Massachusetts, US media reported, in another discouraging sign for their Republican rivals trying to regain the majority in the upper chamber.
Elizabeth Warren, a Harvard professor and liberal firebrand who led the creation of a consumer protection bureau, defeated Senator Scott Brown, US television networks projected.
The seat was held for years by a lion of the Democratic party, the late Ted Kennedy.
Obama wins battleground Wisconsin: Networks
WASHINGTON - President Barack Obama on Tuesday won the battleground state of Wisconsin, depriving Mitt Romney of a key target that could help him win the White House, US television networks projected.
Wisconsin has not voted for a Republican president since Ronald Reagan in 1984, but Romney picked Representative Paul Ryan from the Midwestern state as his running mate and both candidates campaigned heavily there.
With losses in Wisconsin and Romney's Massachusetts, the ticket becomes the first since George McGovern and Sargent Shriver in 1972 in which both the presidential and vice presidential candidates lost their home states.
WASHINGTON - Republican White House hopeful Mitt Romney picked up his first wins in two safe states on Tuesday while President Barack Obama won Vermont as expected, US television networks reported.
Romney won in Indiana and Kentucky, two states traditionally in the Republican column, and Obama prevailed in left-leaning Vermont, according to projections from US networks as polls closed in six states.
Polls also closed in Georgia, South Carolina and Virginia, although officials allowed polling to continue where there were long lines.
Networks said Virginia – which Obama won when he was first elected in 2008 and which would be vital in almost any Romney victory strategy – was too close to call, based on early exit polls and a small number of reported results.
The final opinion polls published before polling began showed the two candidates in a dead heat nationwide, but gave Obama a slight advantage in the handful of swing states like Virginia that will decide the race.
Each state has a quota of electoral college votes based on its population, and the eventual victor will be the candidate who tallies the most.
Polling was due to end in Ohio, the most important of the swing states, at 7:30 pm (0030 GMT), but reliable results were not expected for hours.
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