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U.S. Treasury maintains economy still on pace for 3 percent growth

July 15, 2002
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WASHINGTON, July 15 (Reuters) - Even as U.S. stock markets continued to slump on Monday, a U.S. Treasury Department spokeswoman said Treasury Secretary Paul O'Neill was sticking with his robust economic growth forecast.

"You've heard the secretary say it over and over again: we're on track for 3, 3.5 percent growth rate by the end of the year. He still believes that. If you take a look at the numbers, they back that up," spokeswoman Michele Davis told reporters in a weekly briefing.

As stock prices have slid in the wake of various corporate accounting scandals, Treasury has maintained that the fundamentals of the economy are still intact. Earlier this month, in an interview with Reuters, Treasury's assistant secretary for economic policy Richard Clarida said it was "unusual" to have the economy growing and the market falling. "But quite frankly, it's also unusual, indeed unprecedented, to have the earnings restatements that have occurred in the last year," he said.

Davis said O'Neill does not make a connection between the weakness in stock markets and the potential for problems in the broader economy.

"The Secretary has said he doesn't see a link there. Whether it's housing or automobiles or anything else, the signs are all strong," she said.

The U.S. economy grew at a blistering 6.1 percent annual rate in the first quarter of the year but has slowed considerably since then. The housing market, aided by low interest rates, has remained strong and automakers, using incentives, have managed to keep vehicle sales steady.

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