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Snow says US ready for `nice pickup'

The US economy will gain strength in the next six months as lower taxes and interest rates take effect, US Secretary of the Treasury John Snow said. Nations from Japan to Argentina need to deregulate their markets and pursue sound economic policies to attract investment and contribute to a global recovery, he said.

"The growth rate to date in the American economy has been too anemic," Snow said in a television interview in Washington. "Monetary and fiscal policy are working together to lay the foundations for much better growth."

The recovery Snow anticipates would come as US President George W. Bush prepares to run for re-election next year. The Federal Reserve yesterday cut its benchmark interest rate to a 45-year low of 1 percent, and Bush last month signed a US$330 billion tax cut in an effort to revive the economy.

"We're poised for a nice pickup in economic activity," Snow said, adding that he expects gross domestic product to expand at "well over 3 percent" in the year's final two quarters. The economy is projected to grow at a 3.3 percent annual rate in the third quarter and improve to a 3.5 percent pace in the last three months of the year, according to the median estimate of 55 economists surveyed this month.

Initial jobless claims declined to 404,000 in the week ended last Saturday from 426,000 the previous week, reaching a three-month low, the Labor Department said earlier in Washington. The Commerce Department said first-quarter GDP expanded at a 1.4 percent annual rate, less than the 1.9 percent it estimated last month.

The Standard & Poor's 500 Stock Index, which has risen 12 percent this year, rose 10.5 points, or 1.1 percent, at 5:01pm in New York.

Joshua Bolten, the president's nominee for White House budget director, yesterday said Bush doesn't plan to ask Congress for more tax cuts than those he has already called for. Snow said it was "too early to rule anything out or rule anything in."

"I think that depends on what the president wants," Snow said. "We'll remain committed to good tax policy and tax policy that helps create growth."

The disclosure by Freddie Mac, the second-largest source of mortgage financing in the US, that it understated profits hasn't damaged the financial soundness of US markets, Snow said.

"The issue from our point of view is really the soundness of the system, and we see no reason to question that, based on what we know at this point," he said.

Snow reiterated the administration's support for a "strong dollar," denying suggestions he and Bush have disagreed over the exchange-rate stance. Since Robert Rubin ran the Treasury in 1995, the government has backed a "strong dollar" as being in the US' interest.

The dollar fell last month after comments by Snow led traders and investors to conclude he had abandoned the traditional policy to boost the economy and lift exports.

Eastman Kodak Co, the world's largest maker of photographic film, was saved from a first-quarter loss by the dollar's drop. The US currency is down 14 percent against the euro over the past year.
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