Bush Treasury Official Talks Up the Economy

Treasury Secretary Paul H. O’Neill said Sunday the economy is fundamentally sound despite the stock market’s troubles and the business scandals that have shaken consumer confidence.

“I’m a deep believer in the potential and the reality of the greatest economy ever conceived,” said O’Neill, making high-profile appearances on the talk shows following criticism of his travels abroad during the recent economic volatility.

The Bush administration is trying to ward off potential political damage in the midterm elections this fall by talking up signs that the economy is well-positioned for growth despite the increasing reports of companies’ accounting irregularities, which have caused market jitters.

“Out there in our economy, out there in Main Street, the real growth in our economy is moving just as we thought it would,” O’Neill said on NBC’s “Meet the Press.” Citing reports on productivity growth and second-quarter earnings, O’Neill said that “there is good news out there” drowned out by “the steady amplification of the negative stuff.”

O’Neill said that “people who are invested in the American economy over time are going to win. There has never been an extended period of time in our history where investments in the U.S. economy didn’t win.”

Over the last 10 weeks, investors drove down Dow prices to five-year lows, although Wall Street last week posted its biggest weekly gain since May.

“I think we’re reaching for a bottom, if we’re not there now,” said John Bogle, founder and former chairman of the Vanguard Group of mutual funds, which manages $590 billion in assets for 17 million clients.

“I think investors’ confidence has been shattered, and it’s going to take a lot more than some congressional action to rebuild it,” he said on “Fox News Sunday.”