The United States faces the prospect of high unemployment for some time as the Federal Reserve embarks on a risky and unproven course to bring back solid economic growth.
All eyes will be on the October labour market report on Friday, expected to show a dip in job creation and an unemployment rate stuck at 9.6 per cent for the third consecutive month.
The Federal Reserve announced on Wednesday it would inject an additional $US600 billion ($A598.12 billion) into the struggling economy, through the purchase of new Treasury debt from financial institutions at a rate of around $US75 billion ($A74.76 billion) a month.
Fed chairman Ben Bernanke said the extraordinary action was necessary because the central bank has a duty to help promote increased employment and sustain price stability.
Though the current low level of inflation was "generally good" it poses the risk of morphing into deflation, a dangerous cycle of falling prices and wages, Bernanke said in an opinion article published Thursday in the Washington Post.
But it was the suffering job market that spurred the stimulus move, known as "quantitative easing."
Bernanke said that in the panel's review of economic conditions, "we could hardly be satisfied."
"Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 per cent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer," he said.
"The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills."
The Fed action came a day after Tuesday's nationwide congressional and local elections that handed big victories to Republicans, who have called for less government interference in the US economy.
Republicans won control of the House of Representatives and whittled the majority of President Barack Obama's Democrats in the Senate.
At the top of voters' complaints was persistently high unemployment more than a year after the recession officially ended, along with massive federal spending to rescue the economy from recession that has produced record deficits.
The government's weekly snapshot on unemployment trends reinforced the picture of a depressed labour market treading water.
Initial unemployment claims rose more than expected in the week ending October 30, up 4.6 per cent from the prior week, the Labor Department reported.
"Unfortunately, there is nothing in the data that suggests the employment sector is on the cusp of entering a prolonged hiring expansion.
"Instead, the stability suggests that employment growth is going to be slow and sluggish for the foreseeable future," said Jeffrey Rosen at Briefing Research.
Andrew Gledhill at Moody's Analytics noted that businesses remained anxious about economic conditions and were being cautious about payroll decisions, while layoffs were still climbing at a rate consistent with minimal job growth.
"The stalled labour market will not significantly break out of this trend until the second half of next year," Gledhill said.
"Even once widespread hiring resumes, it will take considerable job creation to restore employment to its pre-recession level; we forecast that won't occur until 2013."
AFP