U.S. Treasury Secretary Henry Paulson said on Tuesday the U.S. economy had turned down sharply but declined to label the situation a recession.
“We know we’re in a sharp downclimb and there’s no doubt that the American people know that the economy has turned down sharply. So to me, much less important is the label that’s placed on it today. Much more important is what we do about it,” he told NBC’s Today Show.
In a separate interview on ABC’s Good Morning America, he described the economy as being in a “sharp decline” — his strongest language yet to describe the current weakness.
He said the Treasury was “all over” the turbulence in capital markets and said he does not think shareholders of Bear Stearns — which was bought by JP Morgan Chase & Co — believe they have been bailed out by the Federal Reserve.
“The big focus on the part of all policy makers is to minimize the spillover to the real economy. We need to keep our capital markets stable, functioning well,” Paulson told NBC.
He said he had great confidence in U.S. capital markets, saying they were resilient and flexible, but it would take some time to work through the turbulence.
Paulson said the planned economic stimulus program could add 500,000 to 600,000 jobs to the economy later this year. The government will begin distributing tax rebate checks of $600 for most individual taxpayers and $1,200 for most couples starting on May 2.
The Federal Reserve cut a key rate three-quarters of a point on Tuesday in its intensified battle against the credit crisis and spreading economic weakness. The question is whether all of the effort will turn the tide.
Federal Reserve Chairman Ben Bernanke and his colleagues have already been working overtime, employing a variety of novel approaches to keep the economy out of a recession or at least moderate the impact of any downturn.
