Treasury Secretary Henry Paulson Remains Optimistic About The Economy
Wednesday, April 30, 2008SUSIE GHARIB: Treasury Secretary Henry Paulson told NIGHTLY BUSINESS REPORT today he has great confidence in the Federal Reserve. Paulson also said he is growing more confident that the credit markets are stabilizing. Washington bureau chief Darren Gersh spoke with Paulson this afternoon and began by asking him about today's GDP report and whether rising inventories coupled with falling sales is a sign that the economy is weakening.
HENRY PAULSON, TREASURY SECRETARY: I’m not making predictions on further weakening. I’m pretty clear that the economy has slowed down and there's no doubt about that and we're focused on the economy right now. We'd like to see it stronger. We don't like to see 0.6 of a percent growth two quarters in a row. Last quarter was a tough quarter. I think this quarter in many ways is going to be a tough quarter. But the report also reminds us that we have a diverse economy. We have a diverse economy. We're facing strong headwinds in terms of the price of oil, health care costs. Food costs are edging up. We've got housing issues, but there are some bright spots and you know, there was progress. There is some growth. And this quarter we've got the stimulus checks going out. We had the deposits going out this week, direct deposits, roughly eight million people will get direct deposits by the end of May. We'll have $50 billion out. By the end of June it will be upwards of $100 billion.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Will that keep the economy growing you think? Is that enough to keep the economy growing?
PAULSON: No, I would say this. It's going to make a difference. It's going to over the course of this year add 500,000 plus jobs. It is, I think, a very, very tangible, real sign that this president, this administration very early on at the first signs of slowing down worked with Congress to get something that will make a difference.
GERSH: You mentioned the headwinds. We're getting a lot of passionate emails from people who are complaining about the impact inflation is having on their life. And one of the things that some people say is driving inflation is a weak dollar. I’m wondering how much is that contributing to inflation and do you think it's time we had a stronger dollar?
PAULSON: Well, let me make a couple of points. First of all, as you saw from the Fed news today, the inflation news is – from the Fed report, the inflation news is more good than bad. Core inflation has been relatively contained and that's been some good news here. In terms of the dollar, I think you've heard me state the case which is a strong dollar is very much in our nation's interest. We have a strong dollar policy. Our economy is going to have ups and downs like anyone else. We're going through a tough patch right now with our economy. The long-term fundamentals though in this country are solid and I think they compare very favorably around the world and I think they're going to be reflected in the value of our currency.
GERSH: Well, let me follow up on that because I’ve heard some people say that with Europe looking like it's starting to slow in Italy and France are starting to slow that -- and what the Fed did today with signaling that maybe we're not going to get a lot more interest rate cuts, that maybe now we've reached a bottom in the dollar against the euro certainly and that the dollar is ready to buck up.
PAULSON: I am -- it's not my job to sit here and call price movements, but what I can tell you is that, you know, I wouldn't bet against our economy over any kind of reasonable period of time. And I like our fundamentals over the immediate to the long term and we're making progress as we work our way through this -- through these issues, making progress in the capital markets and you know, I’m cautiously optimistic that we're going to move through this period.
GERSH: Well, let me ask you about the cautiously optimistic. I mean is the worst time in our credit markets, does it look like it's over?
PAULSON: Darren, you’re right that it does -- things have calmed down. I think we're closer to the end of this period, the turmoil in the capital markets than we are to the beginning. It certainly feels better than it did a month or so ago. But I need to remind you that a reasonable number of our markets aren't yet functioning as normal. There's still a big tendency towards risk adversity. I think we're making progress. I think we're going to continue to make progress. I wouldn't be surprised if we see a few more bumps in the road and if it takes a little bit longer or more than a little bit longer to re-price risk here and to de-leverage. But I am feeling better.
GERSH: Secretary Paulson, thank you for your time.
PAULSON: Thank you.
