US Treasury Secretary Mr Paul O'Neill said today the US economy showed signs of shaking off recession, and predicted the country will return to budget surpluses.
"Economic fundamentals are in place for a return to growth of between 3 per cent and 3.5 per cent toward year's end," Mr O'Neill told a retail business group, delivering a forecast roughly in line with those of most Wall Street economists.
|
"We believe that the fundamentals are in place for a return to ... a 3 per cent to 3.5 per cent real rate of growth, clear, as we move through the 12 months of this year," Mr O'Neill said in response to a question at an annual meeting of the National Retail Federation.
Mr O'Neill urged the US Congress to cooperate in reviving an economic stimulus package, which failed in December amid acrimony in the Senate about whether tax cuts or spending measures would do more to help the growing number of unemployed.
In an earlier interview on CNBCtelevision, Mr O'Neill said economic data were showing signs of improvement.
"The data that I'm looking at tell me the economy is and has been moving from a slow period to one where the data is kind of mixed and we are seeing some positives," he said.
Yesterday data showed retail sales dipped 0.1 per cent in December, but the drop was considerably smaller than what Wall Street had expected.
Mr O'Neill said this data for the key Christmas holiday shopping month matched his cautiously optimistic assessment of the economy.
"In the short term, the economy should get a lift from restocking inventories," Mr O'Neill said. After that, he added, "we need to kick in the investment side of business activity" to get a sustained recovery from recession that began last March.
Echoing statements from Federal Reserve policymakers, Mr O'Neill said inflation remained under control. But he added he was beginning to see evidence of pricing power returning - usually viewed as an sign demand for goods is rising.