Stimulus on the way, Geithner top Treasury pick: poll

By Pedro Nicolaci da Costa

NEW YORK (Reuters) - A newly empowered Democratic Congress will soon pass another fiscal stimulus package, while New York Federal Reserve President Timothy Geithner is President-elect Barack Obama's most likely choice to head Treasury, according to a Reuters poll.

Obama swept to victory in Tuesday's historic vote while Democrats emerged with significant majorities in both houses of Congress.

The outcome will tend to favor the view that government must play an active role in cushioning the blow of the current downturn on those most vulnerable, analysts said. All 49 respondents said they foresee the swift enactment of another stimulus plan.

"We expect President-elect Obama to move decisively to address economic stress," said Jan Hatzius, senior economist at Goldman Sachs. "We suspect he will support even more fiscal stimulus than the $200 billion we have penciled into our forecast. Congress could move on this even before the change-over on January 20."

As for who Obama will pick to lead the economy out of the crisis, economists seemed to converge on Geithner, believing he embodies that proper mix of understanding of the banking sector and not being seen as too close an ally of Wall Street.

Twenty-six out of 48 economists picked Geithner for the top Treasury spot, while former secretary Larry Summers came second with 14 votes. The remaining respondents looked to former Fed Chairman Paul Volcker and New Jersey governor Jon Corzine.

When it comes to the Federal Reserve, the vast majority (38 out of 47) believes Obama will give Chairman Ben Bernanke another go round at the central bank.

Given that Bernanke has largely orchestrated the creation of an array of new lending facilities to help credit markets, it would make sense for Obama to seek some continuity in Fed leadership, say analysts.

"The Fed's got its plate full trying to hold the financial system together," said Scott Andersen, economist at Wells Fargo. "With bank lending still largely in deep freeze, and household asset values plunging, it will fall on government to be the buyer of last resort."

The outlook for the markets also remains murky. Economists in the survey predicted the Dow Jones industrial average would rise to 9,450 by the end of the year -- not much of a gain from the current 8,770 considering the magnitude of losses suffered in recent months.

Stocks have plunged nearly 40 percent from peaks last year. October alone was the worst month for global equity markets in over 20 years.

(Polling by Bangalore Polling Unit)

(Reporting by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)