US Treasury Secretary bids to reassure investors

US Treasury Secretary Paul O'Neill has sought to reassure investors who have seen their retirement accounts shrink after a wave of corporate scandals that the government is working to ensure the economy remains sound.

In an article published in The Washington Post, Mr O’Neill said the US economy remains fundamentally strong despite the recent sharp drop in stock prices: “We have had two straight quarters of solid growth. Consumer spending has stayed strong and business investment is picking up.

“As our economy continues to grow at a healthy pace, Americans will see their incomes and their retirement accounts grow as well.”

New government statistics show the US economy grew at a seasonal rate of just 1.1% in the second quarter, down from 5% in the first. The lacklustre second-quarter performance has fuelled fears the economy could dip back into recession.

The Treasury Secretary has been criticised in recent weeks for not doing enough, as the Bush administration’s chief economic spokesman, to help buoy the markets.

However, the former business executive said the economy spoke for itself.

“Confidence in our financial markets ... does not come from talking heads on television. It derives from the economic fundamentals, which today are strong,” he said.

Even so, Mr O’Neill took pains to assure investors the United States is “adjusting” to the problems it faces, “making needed repairs and moving forward”.

He cited President Bush’s recent signing of legislation to improve corporate accountability and auditor oversight, efforts to create a Department of Homeland Security and Congress’ approval of a bill to open new markets for US exports through trade negotiations.