By Julie Pace/AP House Correspondent

WASHINGTON (AP) -- Asserting "America's possibilities are limitless," President Barack Obama declared on Monday that a decade of war is ending and the nation's economy is recovering as he launched into a second term before a flag-waving crowd of hundreds of thousands on the National Mall.

"My fellow Americans, we are made for this moment, and we will seize it, so long as we seize it together," Obama said, moments after taking the oath of office on a crisp day in the nation's capital.

The president didn't dwell on any first-term accomplishments but looked to hard work ahead in a country still grappling with a sluggish economy.

"We must make the hard choices to reduce the cost of health care and the size of our deficit," he said. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future."

Hundreds of thousands of people fanned out across the Mall, and millions more watched on television, as Obama took the oath of office to begin his second term.

Sandwiched between the bruising presidential campaign and looming fiscal fights, Monday's inaugural celebrations marked a brief respite from the partisan gridlock that has consumed the past two years.

Standing in front of the flag-bedecked Capitol, he implored Washington to find common ground over his next four years. And seeking to build on the public support that catapulted him to the White House twice, the president said the public has "the obligation to shape the debates of our time."

"Not only with the votes we cast, but with the voices we lift in defense of our most ancient values and enduring ideals," Obama said.

Looking ahead to his second-term agenda, the president said the nation must "respond to the threat of climate change" and tackle the comprehensive immigration reform that has eluded Washington for years.

"Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity," he said.

Moments earlier, Obama placed his hand on two Bibles - one used by the Rev. Martin Luther King Jr. and the other used by Abraham Lincoln - and recited the brief oath of office. Michelle Obama held the Bibles, one on top of the other, as daughters Malia and Sasha looked on.

Vice President Joe Biden was also sworn in for his second term as the nation's second in command.

Monday's oats were purely ceremonial. The Constitution stipulates that presidents begin their new term at noon on Jan. 20, and in keeping with that requirement, Obama was sworn in Sunday in a small ceremony at the White House.

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Obama believes America's "possibilities are limitless"