"Americans are hurting in a way that they have not hurt for a long time," McCain said on the CBS News program "Face the Nation."

When asked why he previously said the economy was fundamentally sound, McCain said: "Well, because I have great confidence and faith in America, in our innovation, in our capabilities. But these are tough times now. Listen, America's best days are ahead of us. But you know, we've got a very tough sledding to go through."

McCain expressed support for the government's plan, announced Sunday, to rescue the nation's two mortgage giants, Fannie Mae (NYSE:FNM) and Freddie Mac. (NYSE:FRE)

The Treasury Department seized control of the two corporations and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency.

"I think it has to be done," McCain said. "I think that we've got to keep people in their homes. There's got to be a restructuring, there's got to be reorganization and there's got to be some confidence that we've stopped this downward spiral.

"It's hard, it's tough, but it's also the classic example of why we need change in Washington," he said.