The US economy is flexing "real muscle" and much of the third-quarter's strength will carry into coming months to boost the creation of jobs, US Secretary of the Treasury John Snow said.
"While it will be difficult to grow at quite that pace in coming quarters, it seems clear we have entered a new phase of economic expansion," Snow said in a speech to the Economic Club of Washington. "Much of the strength we saw in the third quarter is likely to continue. This is not a fleeting glimmer -- there is real muscle behind the growth trend."
The US$11 trillion economy expanded at a 7.2 percent annual rate from July through September, the fastest in almost two decades, the Commerce Department reported last week.
Economists expect GDP growth to slow to a 4 percent annual rate in this year's final three months, economists said. Snow credited US President George W. Bush's US$1.7 trillion of tax cuts, rising stock prices and gains in productivity for helping the economy recover from a recession that ended two years ago this month.
The replenishing of low inventories and improving economic growth overseas should underpin the recovery, Snow said.
"We've seen a real turnaround this year and the recovery is clearly solidifying," he said.
The Treasury secretary said that if growth remains above 4 percent, it should "lead to a pickup in employment," which has lagged the revival of GDP. The economy may have added 65,000 jobs in October for a second straight gain, based on the median estimate of economists surveyed ahead of Friday's Labor Department report.
Alfred Mockett, chief executive officer of American Management Systems Inc. and a member of the audience, said he agreed with the Treasury chief's assessment. American Management is a Fairfax, Virginia-based software-development company.
"For the first time, chief information officers are spending their whole budgets, talking about how to boost revenues and produce new products," Mockett said. "This bodes well for an economic uptick."
Two reports today added to evidence of a stronger economy.
The Institute for Supply Man-agement's index of non-factory businesses climbed to 64.7, the second-highest on record, from 63.3 in September.
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