Swagel Delivers Economic Update

by Mike Godfrey, for LawAndTax-News.com, Washington

11 March 2008

US Assistant Treasury Secretary, Phillip Swagel, on Friday delivered a breakdown of the latest economic updates for the United States.

Mr Swagel began by stating that:

"Today's job market report reflects the impacts of the housing correction, credit market strains, and high energy prices. We have known for some time that these factors have been weighing on the economy, and this is why the President took action with the stimulus package. We expect the stimulus to start taking effect in the second quarter; it will support consumer and business spending while adjustments continue in housing and credit markets."

According to Mr Swagel, employment in the US fell during February. Swagel explained:

"Payroll employment fell by 63,000 in February, following a decrease of 22,000 jobs in January, The United States has added 8.2 million jobs since August 2003. Employment increased in 47 states and the District of Columbia over the year ending in December."

"The unemployment rate edged down to 4.8% in February from 4.9% in January. Unemployment rates declined in 12 states and the District of Columbia over the year ending in December," he added.

Despite this, Swagel was keen to point out that there are still many signs of economic strength within the country:

"Business spending on commercial structures and equipment rose solidly in the fourth quarter. Healthy corporate balance sheets should support continued investment growth," he commented, going on to add that:

"Strong global growth is boosting US exports, which grew by 7.9% over the past 4 quarters. Core inflation remains contained. The consumer price index excluding food and energy rose 2.5% over the 12 months ending in January."

Swagel then went on to reassure people that:

"The Economic Stimulus Package will provide a temporary boost to our economy."

"The package will help our economy weather the housing correction and other challenges. The Economic Stimulus Act of 2008, signed into lay by President Bush on February 13, has two main elements - temporary individual tax relief so that working Americans have more money to spend and temporary tax incentives for businesses to invest and grow. Together, the legislation will provide about USD150bn of tax relief for the economy in 2008, leading to the creation of over half a million additional jobs by the end of this year."

Finally, Mr Swagel concluded his update by suggesting that:

"Pro-Growth Policies will enhance long-term US economic strength."

He concluded: "We are on track to make significant further progress on the deficit. The FY07 budget deficit was down to 1.2% of GDP, from 1.9% in FY06. Much of the improvement in the deficit reflects strong revenue growth, which in turn reflects strong economic growth."

"Looking ahead, higher spending on entitlement programs dominates the future fiscal situation; we must squarely face up to the challenge of reforming these programs."

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