The Obama administration is closely watching the economic fallout from Egypt's political crisis and believes progress toward democratic reforms would help stem economic instability, a U.S. official said on Wednesday.

We're certainly mindful of the economic impact. We're certainly monitoring it closely, said Ben Rhodes, White House deputy national security adviser for communications.

Egypt's turmoil is costing the country about $310 million a day, according to an analysis from Credit Agricole bank. The impact on commerce included a 1.6 percent drop in revenue in January from December for the Suez Canal, a vital source of income.

Rhodes, speaking in a conference call with reporters, said that insufficient steps by the Egyptian government to meet the demands of protesters were exacerbating the economic woes.

U.S. President Barack Obama and his aides have urged Egyptian President Hosni Mubarak's government to move more quickly on a transition of power and to do more to engage a broad swath of Egyptian society in talks on the country's political future.

The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition, Rhodes said.

Stability is not going to come from the status quo. It's going to actually come from steps that demonstrate meaningful change and to channel this into a set of negotiations that lead to free and fair elections, he added.