WASHINGTON - US Treasury Secretary Henry Paulson said on Thursday he expects 'moderate' growth in the US economy this year and some stability returning to the housing market in a matter of months.
Mr Paulson: 'While our economy faces substantial difficulties that will continue to be a drag on growth in the short term, it is important to remember that our long-term fundamentals are strong'The top US economic official made his comments after data showed a 1.9 per cent growth pace in the second quarter lifted by an economic stimulus plan and exports, but with some analysts still worried about a possible recession.
'While our economy faces substantial difficulties that will continue to be a drag on growth in the short term, it is important to remember that our long-term fundamentals are strong,' he said in a Washington speech.
'Recognising the challenges ahead of us, I expect our economy to continue growing this year although at a moderate pace. We are making progress although not in a straight line; housing continues to be at the heart of our economic challenges and remains our most significant downside risk.'
Housing market
Mr Paulson was relatively upbeat on prospects for a recovery in the battered housing market after the worst slump in decades.
He said the market will be helped by the recently enacted housing rescue package aimed at helping homeowners refinance and adding liquidity to the sector, but suggested there appears to be some light at the end of the tunnel.
'Foreclosures and existing home inventories are likely to remain substantially elevated this year and next and home prices are likely to decline further on a national basis,' he said.
'The key question is, 'When will the correction be largely behind us?' While home price adjustments will continue for some time, and certainly well beyond the end of the year, I believe we can move through the bulk of the correction in months rather than years.' -- AFP
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