Treasury chief says energy costs prolong US slump

19 June 2008 19:45  [Source: ICIS news]

WASHINGTON (ICIS news)--Treasury Secretary Henry Paulson warned on Thursday that high energy prices could lengthen the US economic slowdown but said he is confident that the nation’s economy will bounce back.

 

In remarks to a financial group, Paulson said that while the federal economic stimulus programme is helping consumers weather slow growth amid inflationary food and gasoline prices, “the headwind of high energy prices has the potential to lengthen the economic slowdown”.

 

“The US economy is going through a rough period,” Paulson said. 

 

He added that after six straight years of almost 3% average annual growth, a rate considered strong for developed economies, the US growth rate geared down late last year.

 

“We are facing a trio of headwinds - a housing correction, capital markets turmoil and high energy and commodity prices,” he said.

 

However, he said, the $150bn (€96bn) federal stimulus package launched earlier this year is “having an impact as retailers are reporting increase sales as people receive and spend their checks”. 

 

The housing correction is proceeding, he said, while government and private sector initiatives are helping financially able homeowners keep their properties and make new mortgage financing available for first-time buyers.

 

“I believe market conditions will continue to improve, but not in a straight line,” Paulson said, indicating that US economic performance will continue to see episodes of up and down movement for some time.

 

“Overall, I believe that the United States is on the right path to resolving market disruptions and building a stronger financial system,” he said.

 

Paulson noted that the combination of high energy and commodity prices, market stress and a housing correction is causing trouble for America’s families and workers.

 

“But we also know that the US economy’s performance for the past 50 years has been second to none and that we have undergone difficult economic periods in the past,” he said.

 

“I understand that doesn’t make the day-to-day much easier right now, but I am confident because our economy is resilient, deep and competitive.”

 

“One thing is clear - whatever our current difficulties, I wouldn’t bet against the US worker, the US economy or the US financial system,” he said.

 

($1 = €.64)

 

To discuss issues facing the chemical industry go to ICIS connect

By: Joe Kamalick
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly