The Federal Reserve has explicitly criticised budget cuts imposed by Congress, blaming fiscal policy for holding back the US's economic recovery.
The US economy is still too weak for the Federal Reserve to pull back from its $85bn-a-month stimulus package, the central bank said on Wednesday.
Barack Obama warned on Saturday of a "ripple effect" through the US economy that would cost hundreds of thousands of jobs after he reluctantly signed an order to begin a huge $85bn (£56bn) programme of government cuts.
The Obama administration has issued its strongest warning so far that that the looming sequestration budget cuts will cause "calamity" for air travellers.
President Barack Obama has been accused by a senior Republican of being eager to take the US over the fiscal cliff for political gain, as Washington edges closer to a year-end deadline with no deal in sight.
Barack Obama left Washington with his family for a Christmas break in Hawaii on Friday night, an acknowledgment that weeks of negotiation over the economy's looming crisis had ground to a halt.
The stand-off between the White House and Congress over the 'fiscal cliff' turned into a full-blown crisis on Thursday night when Republican House Speaker John Boehner was publicly humiliated, unable to command enough support to secure passage of his own bill.