MercoPress. South Atlantic News Agency

Bush optimistic with US economy sustained growth

The United States economy is set to grow 3.6% this year compared with earlier estimates of 3.4% according to President George Bush's Council of Economic Advisors, revealed Thursday outgoing Treasury Secretary John Snow.
However consumer prices are forecasted to reach 3% instead of the original 2.4%.

Mr. Snow said that President Bush's tax cuts policy and the Federal Reserve low interest rates strategy are behind the success of the US economy expansion. "The revised percentage shows a faster growth at the beginning of 2006 followed by a modest expansion and from then on a sustained rhythm", said Edward Lazear, president of the White House Council of Economic Advisors.

"Available data indicate real GDP in the four quarters of 2006 will be close to 3.6%, which is 0.2% up from previous estimates".

Economist Lazear added that from then on "GDP growth in the coming five years should average 3% which is in line with the historic average of the last two decades".

However analysts are not so optimistic arguing that while US growth is strong, there are some confusing signals coming from the world's largest economy and it may be running out of the steam that propelled expansion to an annual rate of 5.3% in the first quarter.

Michael Cheah of AIG SunAmerica Asset Management said that the latest economic reports did not resolve "the bigger issue of whether the Fed will stop raising rates on fears of overshooting, or whether they will have to go on".

Despite the concerns, many key indicators are continuing to improve and the White House forecast an average unemployment rate of 4.7% for 2006, down from the 5% forecast last year.

In what analysts said was an effort to reassure investors that his administration is handling the economy well, President Bush appointed former Goldman Sachs chairman Henry Paulson to become the new treasury secretary.