WASHINGTON — To the victor goes the mess.

Barack Obama's presidential election victory comes with an albatross of a prize — an economy beset by a stubborn housing slump and the worst financial crisis in 70 years.

Consumers and businesses are sharply reducing their spending and the government is awash in red ink.

"He will inherit an economy that is in recession and ... is likely to get worse before it gets better," said Stuart Hoffman, chief economist for PNC Financial Services.

The government said Wednesday it will sell $55 billion in bonds next week as part of a massive borrowing to pay for its financial rescue programs. Borrowing is expected to reach a record $550 billion in the final three months of the year.

The Treasury Department said it is bringing back its three-year notes, selling them monthly to help cover the increased borrowing needs, and will auction $25 billion of them on Monday. The government also will offer $20 billion in 10-year notes next Wednesday, and $10 billion in 29 3/4-year bonds on Thursday.

Officials project the government will need to borrow an additional $368 billion in the first quarter of 2009.

Stocks were down in early trading Wednesday as investors, focused on the economy rather than the election, cashed in some of their gains from Tuesday's rally that sent the Dow Jones industrials up more than 300 points. The Dow was down about 160 points in morning trading, and broader market indexes also were down about 2 percent.

Asian stocks rallied Wednesday as investors there were hopeful Obama would tackle the U.S. financial crisis with renewed vigor, although some voiced concerns that a Democratic president and Congress might turn more protectionist. Japan's Nikkei 225 stock average climbed 4.5 percent, while Hong Kong's Hang Seng index rose 3.2 percent.

Earlier Tuesday, the another poor report on the state of the U.S. economy was released. The Commerce Department reported factory orders dropped 2.5 percent in September from August, more than three times as much as analysts had expected. Excluding autos and aircraft, orders fell 3.7 percent, the steepest drop since 1992, when the department began tracking sector-specific changes.

The weakness was led by a heavy drop in nondurable goods orders, which fell 5.5 percent. That included a 17 percent drop in the value of petroleum and coal products, reflecting the decline in oil and gas prices in September.

Analysts said the report wasn't as bad as it looked, because much of the decline was driven by the drop in the value of oil and gas orders.