WACO, Texas, Aug. 13 (UPI) -- U.S. Treasury Secretary Paul O'Neill emphasized Tuesday the "resiliency" of the U.S. economy but warned that the administration would place a tight hand on spending.
In opening remarks at the President's Economic Forum in Waco, O'Neill said he saw "many reasons to be positive," noting that inflation was low, automobile sales were strong and consumer spending overall was "very strong."
His comments come just hours before the Federal Reserve was to announce its decision on interest rates. In spite of the weakened economy, particularly the stock market's decline in recent months, most Wall Street analysts did not expect the Fed to ease rates further.
O'Neill appeared critical of media coverage of the economy, saying it was difficult "to get coverage for good news." He blamed the media for downplaying economic progress.
On corporate governance, he said, we need to "ensure American employers, consumers and investors have all the information they need."
O'Neill said the economy was recovering and that he expected gross domestic product to grow by 3.5 percent by the end of this year and going into next year. But he also stressed the need for the government to take a firmer line of spending.
We need to ensure, O'Neill said, "that we do not put ourselves in a position where even in good economic circumstances we are running a fiscal deficit."
"We'll also work with Congress to restrain wasteful government spending, because overspending in Washington burdens our economy," he said. "And the president has called on Congress to protect individuals' control over their 401(k) holdings."
O'Neill's comments suggest the administration will seek Tuesday to reassure investors that the fiscal deficit, now thought to be running toward a level of about $200 billion, will be curbed. There has been growing concern, especially on the part of international investors, the deficit and the issuance of Treasury notes is rising.
